On Estimating Marginal Tax Rates and Tax Progressivities for U.S. States

Reed, W.; Rogers, Cynthia; Skidmore, Mark

On Estimating Marginal Tax Rates and Tax Progressivities for U.S. States

W. Reed (), Cynthia Rogers and Mark Skidmore

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: This research presents a simple procedure for improving state-specific estimates of marginal tax rates (MTR’s). Most research employing MTR’s follows a procedure developed by Koester and Kormendi (K&K, 1987). Unfortunately, the time-invariant nature of the K&K estimates precludes their use as explanatory variables in panel data studies. Furthermore, their estimates are not based on statutory tax parameters. In contrast, our procedure produces timevarying estimates of MTR’s that are directly related to observed changes in statutory tax parameters. Using comprehensive data on state tax policy parameters, our procedure produces state-specific MTR’s estimates for all 50 states over the years 1977-2004. We compare our refined MTR’s to alternative estimates and evaluate implications for estimating tax progressivity for US states.

Keywords: State tax revenues; Marginal tax rates; Tax burden; Tax progressivity; Economic growth. (search for similar items in EconPapers)
JEL-codes: H24 H25 H71 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2008-08-08
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:08/17

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