Analyzing a proposal to ban state tax breaks to businesses

Thomas Holmes ()

Quarterly Review, 1995, vol. 19, issue Spr, 29-39

Abstract: This article asks whether or not the overall welfare of U.S. residents would be greater if U.S. federal law prohibited state governments from offering tax breaks to particular businesses. The answer of a formal model is yes, making such tax breaks illegal could increase a summary measure of total welfare in the economy. According to the model, the policy could increase welfare because it would increase the tax revenue collected from capital agents, and that revenue could finance an increase in spending on public goods. The policy would also spread the tax burden more evenly in the economy and so reduce the deadweight loss of taxation per dollar collected. In addition, the policy would lead to a more efficient pattern of industry locations in the economy.

Keywords: state finances; Taxation (search for similar items in EconPapers)
Date: 1995
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://minneapolisfed.org/research/qr/qr1922.html (text/html)
http://minneapolisfed.org/research/qr/qr1922.pdf (application/pdf)

Related works:
Working Paper: Analyzing a proposal to ban state tax breaks to businesses (1995)
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:fip:fedmqr:y:1995:i:spr:p:29-39:n:v.19no.2

Access Statistics for this article

More articles in Quarterly Review from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().