Intranational Trade and Regional Tax Rates: A Welfare Analysis on the U.S. Economy

Hakan Yilmazkuday

No 1106, Working Papers from Florida International University, Department of Economics

Abstract: This paper analyzes the effects of personal tax rates on macroeconomic variables at regional and national levels through a general equilibrium trade model with private and public sectors, migrating individuals, intermediate inputs and ?nal goods trade, and an analytical solution. The regional model can explain state-level variables in the U.S. almost perfectly. The counterfactuals on the U.S. economy suggest that a nationwide increase in the state-level dividend-income tax rates would be the best option to expand the private sector, tax revenues, and, most importantly, the individual welfare in all states; a nationwide increase in the state-level wage-income tax rates would hurt the economy in all states; property and sales taxes have fewer effects on the U.S. economy. The results are mainly driven by intermediate input trade.

Keywords: Regional Taxes; Trade; Public Sector; Private Sector; the U.S. (search for similar items in EconPapers)
JEL-codes: H24 H71 R12 R13 R32 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2011-07
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http://casgroup.fiu.edu/pages/docs/3501/1311369803_11-06.pdf First version, 2011 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:fiu:wpaper:1106

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