Tax Exporting, Federal Deductibility, and State Tax Structure / Gilbert E. Metcalf.

By:

Metcalf, Gilbert E

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w3839.Publication details: Cambridge, Mass. National Bureau of Economic Research 1991.Description: 1 online resource: illustrations (black and white)Subject(s):

H7 - State and Local Government • Intergovernmental Relations

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: This paper studies the interaction between the federal and state tax systems during the 1980s and in particular considers how the Tax Reform Act of 1986 affected state tax structure. Using a panel data set on state governments over a nine year period, I estimate tax share equations for six categories of taxes. I find that the state personal income tax is sensitive to changes in its tax price but find a much smaller sensitivity to changes in tax prices for the general sales tax. I then consider various reasons for why the sales tax does not exhibit a sensitivity to changes in tax price and consider the implications of these results for policy makers.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w3839 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w3836 Measuring Depreciation For Japan: Rejoinder to Dekle and Summers /	nber w3837 Education and Unemployment of Women /	nber w3838 Education and Unemployment /	nber w3839 Tax Exporting, Federal Deductibility, and State Tax Structure /	nber w3840 Designing a Central Bank for Europe: A Cautionary Tale From the Early Years of the Federal Reserve System /	nber w3841 Rail Costs and Capital Adjustments in a Quasi-Regulated Environment /	nber w3842 Measuring the Contribution of Public Infrastructure Capital in Sweden /	Next

September 1991.

This paper studies the interaction between the federal and state tax systems during the 1980s and in particular considers how the Tax Reform Act of 1986 affected state tax structure. Using a panel data set on state governments over a nine year period, I estimate tax share equations for six categories of taxes. I find that the state personal income tax is sensitive to changes in its tax price but find a much smaller sensitivity to changes in tax prices for the general sales tax. I then consider various reasons for why the sales tax does not exhibit a sensitivity to changes in tax price and consider the implications of these results for policy makers.