EconPapers    
Economics at your fingertips  
 

Corporate taxes and vertical tax externalities: Evidence from narrative federal tax shocks

Yaniv Reingewertz

Regional Science and Urban Economics, 2018, vol. 68, issue C, 84-97

Abstract: The empirical aspects of vertical tax externalities have been studied fairly extensively, but with little consensus – a fact that may relate to difficulties in isolating exogenous components in tax setting policy. Adopting the case of the US and using a narrative approach (Romer and Romer, 2010), I study the vertical effects of federal tax shocks. I find that vertical tax externalities are modest in their size and are only present in corporate taxation. In particular, I estimate that a $1 billion increase in federal tax revenues reduces total state corporate tax revenues by approximately $27 million. Non-corporate state tax revenues do not seem to be affected by federal tax shocks. Taking a state micro-level approach and using firm-level business activity data, I show that the findings point to the erosion of states’ corporate tax bases.

Keywords: E62; H20; H71; H77; Vertical tax externality; Narrative tax shocks; Federal taxes; State taxes (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0166046217302181
Full text for ScienceDirect subscribers only

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:eee:regeco:v:68:y:2018:i:c:p:84-97

Access Statistics for this article

Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou

More articles in Regional Science and Urban Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2018-07-11
Handle: RePEc:eee:regeco:v:68:y:2018:i:c:p:84-97