The Effect of Sales Tax Rates on Food Exemptions

Claudio Agostini

ILADES-UAH Working Papers from Universidad Alberto Hurtado/School of Economics and Business

Abstract: In this paper I explore the relationship between the sales tax rate and the tax treatment of food in American states. One of the main difficulties in the empirical estimation of this relationship is that state governments set the two tax policy variables. This produces a potential endogeneity problem that would bias the estimates if not considered. I use instrumental variables to solve the problem and to identify the effect of the sales tax rate on the probability of having a food exemption. The empirical results show that, on average, a one percentual point increase in the sales tax rate increases by 20% the probability of having a food exemption.

Keywords: Food Exemption; Sales Tax; Instrumental Variables (search for similar items in EconPapers)
JEL-codes: H71 H73 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2004-11
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://fen.uahurtado.cl/wp-content/uploads/2010/07/inv155.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ila:ilades:inv155

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in ILADES-UAH Working Papers from Universidad Alberto Hurtado/School of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Mauricio Tejada ().