Sales Tax Collections in Nonmetropolitan Communities

B Brorsen and Notie Lansford

No 149954, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: Small communities sometimes increase their local sales tax rate in order to maintain or expand public services. The question addressed here is what is the net effect of changing sales tax rates on revenues from sales taxes? Using both semiparametric and nonparametric regression, we find retail sales to be mostly unaffected by sales tax rates as long as the rate is less than four percent. At rates higher than four percent, however, there is a severe reduction in sales, yet not enough that sales tax revenues would decrease with increased rates. For a penny increase in sales tax rates from four cents, a city can expect their revenues to go up 0.86 cents according to the semiparametric model and 0.74 cents according to the parametric model.

Keywords: Community/Rural/Urban Development; Public Economics (search for similar items in EconPapers)
Pages: 2
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Journal Article: Sales Tax Collections in Nonmetropolitan Communities (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:149954

DOI: 10.22004/ag.econ.149954

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