How can revenue be shared

Two important developments have fundamentally changed the allocation of revenue since the early s. First, the ratification of the Sixteenth Amendment in authorized Congress to impose income taxes without apportioning it among the states on the basis of population, a burdensome provision that Article I, Section 9, had imposed on the national government. The second development regulates federal grants—transfers of federal money to state and local governments. These transfers, which do not have to be repaid, are designed to support the recipient governments, but also to encourage them to pursue federal policy objectives they might not otherwise adopt.

The sources of revenue for federal, state, and local governments are detailed in Figure 3. Although the data reflect results, patterns revealed in the figure give us an idea of how governments funded their activities in recent years. For the federal government, 47 percent of revenue came from individual income taxes and 34 percent from payroll taxes, which combine Social Security tax and Medicare tax.

To gain insight on this question check Article I, Section 8, of the Constitution, assigning the federal government various powers allowing it to affect the nation as a whole.

Educational expenditures constitute a major category for all levels. However, whereas the states spend comparatively more than local governments on university education, local governments spend even more on elementary and secondary education. Local governments allocate more funds to police protection, fire protection, housing and community development, and public utilities such as water, sewage, and electricity.

While state governments allocate comparatively more funds to public welfare programs, such as health care, income support, and highways, both local and state governments spend roughly similar amounts on judicial and legal services and correctional services.

Intergovernmental grants offer positive financial inducements to get states to work toward selected national goals. On the other hand, unfunded mandates impose federal requirements on state and local authorities. Mandates are typically backed by the threat of penalties for non-compliance and provide little to no compensation to carry out the mandated action. The national government has used grants to influence state actions as far back as the Articles of Confederation when it provided states with land grants.

In the first half of the s, land grants were the primary means by which the federal government supported the states. Millions of acres of federal land were donated to support road, railroad, bridge, and canal construction projects, all of which were instrumental in piecing together a national transportation system to facilitate migration, interstate commerce, postal mail service, and movement of military people and equipment.

Numerous universities and colleges across the country, such as Ohio State University and the University of Maine, are land-grant institutions because their campuses were built on land donated by the federal government. By , cash grants replaced land grants as the main form of federal intergovernmental transfers and have become a central part of modern federalism.

Federal cash grants have strings attached; the national government wants public monies used for policy activities that advance national objectives. These grants also often require some commitment of matching funds. Examples are Medicaid and the food stamp program—categorical grants. Block grants come with less stringent federal administrative conditions and provide recipients more flexibility over how to spend grant funds. Examples of block grants include the Workforce Investment Act program, which provides state and local agencies money to help youths and adults obtain skill sets that will lead to better-paying jobs, and the Surface Transportation Program, which helps state and local governments maintain and improve highways, bridges, tunnels, sidewalks, and bicycle paths.

Finally, recipients of general revenue sharing faced the least restrictions on the use of federal grants. During the s and s, funding for federal grants grew significantly, as the trend line shows in the figure above.

Growth picked up again in the s and s. Standards can include the level of participation needed by employees and the funding of retirement plans. ERISA allows revenue sharing for retirement plan sponsors so that a portion of earned income from mutual funds would be held in a spending account.

The funds are used to pay for the costs of managing and running the k plans. The amount of money to be allocated and deposited into the revenue-sharing accounts are stipulated in the revenue-sharing agreement.

The fiduciary must notify investors of how the revenue is spent, which helps to provide transparency. When different companies jointly produce or advertise a product, a profit-sharing system might be used to ensure that each entity is compensated for their efforts. Several major professional sports leagues use revenue sharing with ticket proceeds and merchandising. For example, the separate organizations that run each team in the National Football League NFL jointly pool together large portions of their revenues and distribute them among all members.

Various kickers and stipulations can be added to revenue sharing agreements. If the NFL season, for example, got extended from 16 to 17 games in the coming years, the players would receive additional revenue or a kicker if advertising revenue from T. In other words, revenue sharing agreements can include percentage increases or decreases in the future depending on performance or specific pre-set metrics.

Revenue sharing can also take place within a single organization. Operating profits and losses might be distributed to stakeholders and general or limited partners. As with revenue sharing models that involve more than one business, the inner workings of these plans normally require contractual agreements between all involved parties.

The growth of online businesses and advertising models has led to cost-per-sale revenue sharing, in which any sales generated through an advertisement being fulfilled are shared by the company offering the service and the digital property where the ad appeared. There are also web content creators who are compensated based on the level of traffic generated from their writing or design, a process that is sometimes referred to as revenue sharing. Participants in revenue sharing models need to be clear about how revenue is collected, measured, and distributed.

The events that trigger revenue sharing, such as a ticket sale or online advertisement interaction and the methods of calculation are not always visible to everyone involved, so contracts often outline these methods in detail. The parties responsible for these processes are sometimes subjected to audits for accuracy assurance. Some types of revenue sharing are strictly regulated by government agencies.

The advisory council for the Employee Retirement Income Security Act formed the Working Group on Fiduciary Responsibilities and Revenue Sharing Practices in to address perceived issues with the practice of revenue sharing for k plans.

The Working Group determined that revenue sharing is an acceptable practice, and new rules related to transparency were implemented under the authority of the Department of Labor. The Working Group also determined that it should take the lead to formally define revenue sharing with regard to defined contribution plans.

Investing Essentials. Social Security. Alternative Investments. Below, the top industries for the pattern "Revenue Sharing" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 5 firms using this pattern. Below, the pattern "Revenue Sharing" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.

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