Partisan Politics and Excise Tax Rates in the United States

William Hankins

Public Finance Review, 2023, vol. 51, issue 6, 719-747

Abstract: The literature on excise tax rates has provided mixed evidence concerning how partisan ideology affects tax changes. Using a regression discontinuity design and a panel of U.S. states over the period 1970–2019 I find no significant difference in cigarette, distilled spirits, or gasoline excise tax rates between Democratic governors and Republican governors elected by a similar margin. This result is found regardless of whether the governor can run for an additional term or faces a binding term limit. These results are robust to an analysis of the post-southern realignment period, when controlling for southern Democrats, or when analyzing open elections without an incumbent in the running. An implication of this result is that interstate tax competition and the mobility of the tax base dwarfs any ideological differences with respect to excise tax policy.

Keywords: Political parties; excise taxes; regression discontinuity; term limit (search for similar items in EconPapers)
JEL-codes: D72 H11 H71 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:51:y:2023:i:6:p:719-747

DOI: 10.1177/10911421231183395

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