Tax Exemption and State Capital Investment

Julia Lynn Coronado

National Tax Journal, 1999, vol. 52, issue 3, 473-82

Abstract: Recent theoretical models have called into question whether the tax exemption on the interest on municipal bonds actually provides a marginal subsidy to state and local capital investment. This paper develops a framework for testing for the presence of a subsidy and uses a state level data set to estimate the model. The findings provide some evidence that tax exemption subsidizes capital spending, although the results are sensitive to model specification.

Date: 1999
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:52:y:1999:i:3:p:473-82

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