Vertical Externalities in Tax Setting: Evidence from Gasoline and Cigarettes /
Besley, Timothy J.
Vertical Externalities in Tax Setting: Evidence from Gasoline and Cigarettes / Timothy J. Besley, Harvey S. Rosen. - Cambridge, Mass. National Bureau of Economic Research 1999. - 1 online resource: illustrations (black and white); - NBER working paper series no. w6517 . - Working Paper Series (National Bureau of Economic Research) no. w6517. .
March 1999.
A common feature of federal systems is that tax bases are joint property. Consequently, state and federal tax setting decisions are interdependent. Our aim here is to put forward a rudimentary theoretical analysis of this phenomenon, and to use the theory as a framework for econometrically estimating the magnitude of the responses. We find that when the federal government increases taxes, there is a significant positive response of state taxes. For example, a 10-cent per gallon increase in the federal tax rate on gasoline leads to a 3.2-cent increase in the state tax rate.
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Mode of access: World Wide Web.
Vertical Externalities in Tax Setting: Evidence from Gasoline and Cigarettes / Timothy J. Besley, Harvey S. Rosen. - Cambridge, Mass. National Bureau of Economic Research 1999. - 1 online resource: illustrations (black and white); - NBER working paper series no. w6517 . - Working Paper Series (National Bureau of Economic Research) no. w6517. .
March 1999.
A common feature of federal systems is that tax bases are joint property. Consequently, state and federal tax setting decisions are interdependent. Our aim here is to put forward a rudimentary theoretical analysis of this phenomenon, and to use the theory as a framework for econometrically estimating the magnitude of the responses. We find that when the federal government increases taxes, there is a significant positive response of state taxes. For example, a 10-cent per gallon increase in the federal tax rate on gasoline leads to a 3.2-cent increase in the state tax rate.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.