scholarly journals The Tax Gradient: Spatial Aspects of Fiscal Competition

2015 ◽  
Vol 7 (2) ◽  
pp. 1-29 ◽  
Author(s):  
David R. Agrawal
Keyword(s):  
Sales Tax ◽  
Fiscal Competition ◽  
Tax Rates ◽  
Nash Game ◽  
Tax Rate ◽  
Local Taxes ◽  
Percentage Points ◽  
Driving Time ◽  
State Tax ◽  
Tax State

State borders create a discontinuous tax treatment of retail sales. In a Nash game, local tax rates will be higher on the low state tax side of a border. Local taxes will decrease from the nearest high-tax border and increase from the low-tax border. Using driving time from state borders and all local sales tax rates, local tax rates on the lowtax side of the border are 1.25 percentage points higher, reducing the differential in state tax rates by over three-quarters. A ten minute increase in driving time from the nearest high-tax state lowers a border town's local tax rate by 6 percent. (JEL H25, H71, H73, H77)

Do State Sales Taxes Crowd Out Local Option Sales Taxes?

2018 ◽  
Vol 18 (3) ◽  
Author(s):  
Gregory S. Burge ◽  
Cynthia L. Rogers
Keyword(s):  
Local Governments ◽  
Sales Tax ◽  
Tax Rates ◽  
Tax Base ◽  
Tax Rate ◽  
Sales Taxes ◽  
Fiscal Externalities ◽  
Crowd Out ◽  
State And Local ◽  
Fiscal Spillovers

Abstract Currently, sales taxes are imposed at both the state and local levels in 37 US states. In these environments, vertical tax competition occurs as governments share a common sales tax base, and local jurisdictions have autonomy over sales tax rates. As cash-strapped states look to sales taxes for additional revenues, local governments may worry about potentially adverse revenue impacts, as consumers react to combined tax rate increases. This study examines state-municipal and county-municipal fiscal spillovers using an empirical approach that accounts for endogenous tax policy leadership and voter tax fatigue. Employing comprehensive longitudinal data from Oklahoma, we find that state tax hikes significantly crowd out future rate increases for the large group of jurisdictions that are designated as followers. Leader jurisdictions are not found to display crowd-out tendencies, a result that is consistent with recent work suggesting that leaders may be less influenced by vertical fiscal externalities than other jurisdictions.

The Wage Response to a Reduction in Income Tax Rates: The Israeli Tax Reform

2020 ◽  
Vol 20 (2) ◽  
Author(s):  
Roni Frish ◽  
Noam Zussman ◽  
Sophia Igdalov
Keyword(s):  
Income Tax ◽  
Tax Reform ◽  
Tax Rates ◽  
Rate Reduction ◽  
Or Education ◽  
Marginal Tax Rate ◽  
Tax Rate ◽  
Percentage Points ◽  
Wage Earners ◽  
Income Tax Reform

AbstractThis study examines the effect of an income tax reform on wages. An Israeli reform implemented in 2003–2009 reduced individuals’ marginal income tax rate by 7–17 percentage points. We utilized the differential and non-monotonic marginal tax rate reduction, and used Israel Tax Authority panel data of wage earners, merged with Labor Force Surveys. We found that in the business sector, the elasticity of reported gross wages relative to the net-of-tax rate is about 0.1. The wage earners in the lowest wage quintile were not affected by the tax reform, those in the second and third quintiles did not respond to the tax cut, but elasticity increased with wage, reaching about 0.4 in the upper decile. We did not find statistically significant differences in elasticity by gender, ethnicity, or education.

scholarly journals Faktor Penentu Tarif Pajak Efektif Pada Perusahaan Kesehatan: Sebelum dan Saat Covid-19

2021 ◽  
Vol 26 (3) ◽  
pp. 412
Author(s):  
Anindita D. Pinastika, Ferry Irawan
Keyword(s):  
Ownership Structure ◽  
Health Sector ◽  
Tax Rates ◽  
Corporate Tax ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
Tax Management ◽  
State Tax ◽  
Corporate Tax Rates ◽  
The Government

The pandemic of Covid-19 had attacked and contribute to the Indonesia’ economics negatively. State tax revenues could not be achieved given the restrictions on activities that were intensified to prevent the spread of virus. Incentives issued by the government are one of the factors causing the decline in state revenues, one of which is in the form of lowering corporate tax rates. The effective tax rate used in measuring corporate tax management is tested with related-parties transaction, profitability, leverage, and ownership structure variables. The effect of this variable is then compared in 2019 and 2020 to observe whether there is a difference before and during the pandemic. The research was conducted on health sector companiesas a sector that was positively affected by the pandemic. The results of the study show that leverage has an effect on the effective tax rate (ETR) in 2020 while ownership structure has an effect on the ETR in 2019. The effective tax rate of health sector companies, which allegedly decreased due to incentives from the government, has actually increased during the pandemic.

Effects of Unitary vs. Nonunitary State Income Taxes on Interstate Resource Allocation: Some Analytical and Simulation Results

2001 ◽  
Vol 23 (1) ◽  
pp. 39-60 ◽  
Author(s):  
Michael G. Williams ◽  
Charles W. Swenson ◽  
Terry L. Lease
Keyword(s):  
State Government ◽  
Income Taxes ◽  
Tax Credits ◽  
Tax Revenue ◽  
Tax Rates ◽  
Tax Rate ◽  
Unitary State ◽  
State Tax ◽  
State Income ◽  
Tax Structures

This study examines the optimal location choice decisions of a two-state firm in response to changing state corporate income tax rates and tax structures. Because the firm can engineer its tax liability by manipulating between-state location of sales, property, and payroll, changes in relative state tax rates should result in the firm making such location changes. Results of a model firm simulation, examining various combinations of state tax rates and unitary vs. nonunitary tax structures, found that the firm would make interstate resource changes to minimize company-wide state income taxes. Important findings of the study are that tax rate changes in nonunitary states may cause little or no change in resources used in that state. Indeed, in one scenario, the resulting resource flows from a tax increase are favorable to the nonunitary state, making a tax increase a win-win situation for the state government (higher tax revenue and more economic activity). In contrast, changes in unitary state tax rates can result in significant resource changes in both the unitary state and in other states. The finding that tax rate cuts are ineffective in nonunitary states implies that these states may be more successful in attracting investment by changes affecting apportionment factors (tax credits for new capital, or new jobs) or by use of nontax incentives.

Impact of the Sales Tax Rate on its Base: Evidence from a Small Town

1986 ◽  
Vol 14 (3) ◽  
pp. 329-338 ◽  
Author(s):  
John L. Mikesell ◽  
C. Kurt Zorn
Keyword(s):  
Local Governments ◽  
Small Town ◽  
Local Economy ◽  
Sales Tax ◽  
Tax Rates ◽  
Small Cities ◽  
Tax Rate ◽  
Share Model ◽  
Short Run ◽  
The Impact

Local governments and businesses fear that increased local sales tax rates will induce losses to the local economy, even inducing losses so severe that no additional revenue will result from a higher tax rate. Earlier works by Fisher, Hamovitch, and Mikesell have examined sales loss in metropolitan areas, typically finding significant but not overwhelming effects. Those results do not address the question for small cities and typically are complicated by the expenditure effects resulting from the increased tax revenues. The present analysis uses unique data for a small town to examine the impact of a temporary sales tax rate increase with a retail sales share model. The evidence shows a significant but small sales impact that did not endure (a differential of 1% would lower city sales by 3.07%) and no impact on vendor location. The unfavorable rate differential produced a short-run effect, but not economic disaster.

scholarly journals Local Taxes and Fees as a Source of Revenue for Polish Municipalities: Substitutes or Complements?

e-Finanse ◽  
2018 ◽  
Vol 14 (3) ◽  
pp. 49-59
Author(s):  
Julita Łukomska ◽  
Jarosław Neneman
Keyword(s):  
Property Tax ◽  
Tax Rates ◽  
Local Authorities ◽  
Tax Rate ◽  
Local Public Services ◽  
Local Taxes ◽  
Science Centre ◽  
National Science ◽  
Water Provision ◽  
The Relationship

AbstractThe main purpose of this article is analysis of the relationship between local tax and fee policies in Poland. We argue that local authorities have similar and significant discretion over tax and fee policy and, therefore, they can be analysed in a similar way. Links between these policies are analysed to find out whether they are of complementary or substitutive nature. Panel data on 578 Polish municipalities from 2012 to 2016 includes information on property tax rates and tariffs for water provision and sewage disposal for households and companies and is used to run panel regression analysis and to perform a quasi-experiment. The results indicate that there is a relationship between tax and fee policies as well as that taxes and fees are complements for local authorities. Only when a property tax rate has reached a “ceiling”, the municipalities increase fees at a faster rate than comparable municipalities below the ceiling – in this case a fee can be regarded as a substitute for a tax.The paper is based on results of the “Fees for local public services - financial and political importance” research project. The project is funded by Narodowe Centrum Nauki (National Science Centre) grant number UMO-2015/19/B/HS4/02898

Local Sales Tax Competition and the Effect on County Governments' Tax Rates and Tax Bases

2004 ◽  
Vol 26 (1) ◽  
pp. 43-61 ◽  
Author(s):  
LeAnn Luna
Keyword(s):  
Local Governments ◽  
Predatory Behavior ◽  
Sales Tax ◽  
Tax Rates ◽  
Tax Base ◽  
County Governments ◽  
Tax Rate ◽  
Goods And Services ◽  
Cross Border ◽  
Long Run

Local governments can try to attract retail sales by keeping sales tax rates low and encouraging residents of other jurisdictions to cross-border shop. This predatory behavior must be balanced against the governments' desire to raise revenues. This study examines the extent to which local governments compete and attempt to limit cross-border shopping by changing sales tax rates. I estimate two equations, local sales tax rate and local sales tax base, in the short and long run. The local sales tax rate equation represents the county's tax policy choices and the sales tax base equation represents the demand function for the county businesses' taxable goods and services. The regression results show local governments do consider the sales tax rates of neighboring counties in setting their own rates in both the short and long run. The study also provides evidence that the sales tax rates of the home and competing counties will affect the sales tax base of the home county because shoppers will cross borders to take advantage of differences in tax rates between counties.

Time to Retire? The Effect of State Fiscal Policies on Retirement Decisions

2011 ◽  
Vol 101 (3) ◽  
pp. 35-39 ◽  
Author(s):  
Tami Gurley-Calvez ◽  
Brian Hill
Keyword(s):  
State Level ◽  
Disposable Income ◽  
Sales Tax ◽  
Fiscal Policies ◽  
Tax Rates ◽  
State Spending ◽  
Tax Rate ◽  
Percentage Point Increase ◽  
Point Increase ◽  
Retirement Decisions

Our research addresses the importance of state fiscal policies on the probability of retirement using a panel of individual tax return data. Results indicate that a one percentage point increase in the income or sales tax rate reduces the probability of retirement by about 8.7 percent. The evidence suggests that state spending might also affect retirement decisions but magnitudes are inconclusive. In general, the results suggest that the income effect dominates; that is, higher tax rates at the state-level reduce disposable income and decrease the probability of retiring. Results are similar in models examining single and married filers separately.

Deshadowing the Economy as the Vector to Ensure Effective State Tax Policy

2020 ◽  
pp. 132-140
Author(s):  
Anzhela Ya. Kuznetsova ◽  
Yuliia G. Humenna
Keyword(s):  
Tax Policy ◽  
Shadow Economy ◽  
Correlation Coefficients ◽  
Tax Rates ◽  
The European Union ◽  
Tax Rate ◽  
Tax Revenues ◽  
State Tax ◽  
Key Indicators

The article is devoted to the study of the interconnection of tax policy indicators and the shadow economy in the complex interaction in the context of the country’s competitive tax system. Key indicators of tax policy implementation (total tax and contribution rates, number of taxes, time to administer taxes by economic entities) of Ukraine are compared with the countries of the European Union. The paper uses empirical correlation coefficients to determine the relationship between tax rates, tax revenues, and the level of economy shadowing, both for the Ukrainian economy and internationally. The dual role of the shadow economy in the use of the Laffer concept is substantiated. The key directions of the deshadowing policy of the economy of the country are identified. It will help to balance and increase the efficiency of the implementation of the mechanisms of taxation of economic entities. Keywords: shadowing of the economy; tax policy; tax rate; tax revenues; tax burden; Laffer concept.

The Effect of Taxation and Corruption on Firm Growth: An Empirical Investigation for Vietnam

2016 ◽  
pp. 5-29
Author(s):  
Bich Le Thi Ngoc
Keyword(s):  
International Development ◽  
Firm Growth ◽  
Empirical Investigation ◽  
Manufacturing Firms ◽  
Economic Management ◽  
Tax Rate ◽  
Percentage Point Increase ◽  
Percentage Points ◽  
Point Increase ◽  
The Impact

The aim of this study is to analyze empirically the impact of taxation and corruption on the growth of manufacturing firms in Vietnam. The study employed pooled OLS estimation and then instrument variables with fixed effect for the panel data of 1377 firms in Vietnam from 2005 to 2011. These data were obtained from the survey of the Central Institute for Economic Management and the Danish International Development Agency. The results show that both taxation and corruption are negatively associated with firm growth measured by firm sales adjusted according to the GDP deflator. A one-percentage point increase in the bribery rate is linked with a reduction of 16,883 percentage points in firm revenue, over four and a half times bigger than the effect of a one-percentage point increase in the tax rate. From the findings of this research, the author recommends the Vietnam government to lessen taxation on firms and that there should be an urgent revolution in anti-corruption policies as well as bureaucratic improvement in Vietnam.

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