 Tax Interdependence in the U.S. StatesILADES-UAH Working Papers from Universidad Alberto Hurtado/School of Economics and Business Abstract: State governments finance their expenditures with multiple tax instruments, so when collec-tions from one source decline, they are typically compensated by greater revenues from other sources. This paper addresses the important question of the extent to which personal and cor-porate income taxes are used to compensate for sales tax ‡uctuations within the U.S. states. The results show that one percent increase in the sales tax rate is associated with a half and a third percent decrease in the personal and corporate income tax rates respectively. In terms of tax revenues per capita, the results show that a one percent increase in the sales tax revenue per capita is associated with a 3 percent and a 0.9 percent decrease in the corporate and personal income tax revenue per capita respectively. On average then, an exogenous reduction of $4.5 in the sales tax revenue per capita is compensated, ceteris paribus, with an increase of either $3.4 in the collections per capita from corporate taxes or $3.6 in the ones from personal income taxes. New Economics Papers: this item is included in nep-pub Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ila:ilades:inv151 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in ILADES-UAH Working Papers from Universidad Alberto Hurtado/School of Economics and Business Contact information at EDIRC. |
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