Local Revenue Hills: Evidence from Four U. S. Cities

Andrew Haughwout, Robert Inman (), Steven Craig and Thomas Luce ()
Additional contact information
Robert Inman: Department of Finance, Wharton School, University of Pennsylvania
Thomas Luce: Ameregis - Research, Minneapolis

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We provide estimates of the impact and long-run elasticities of tax base with respect to tax rates for four large U.S. cities: Houston (property taxation), Minneapolis (property taxation), New York City (property, general sales, and income taxation), and Philadelphia (property, gross receipts, and wage taxation). Results suggest that three of our cities are near the peaks of their revenue hills; Minneapolis is the exception. A significant negative effect of a balanced budget increase in city property tax rates on city property base is interpreted as a capitalization effect and suggests that marginal increases in city spending do not provide positive net benefits to property owners. Estimates of the effects of taxes on city employment levels for New York City and Philadelphia -- the two cities for which employment series are available -- show the local income and wage tax rates have significant negative effects on city employment levels.

Keywords: Local Taxation; City Fiscal Policy; Urban Economic Development (search for similar items in EconPapers)
JEL-codes: H71 R13 R51 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2000-02-01, Revised 2003-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Local Revenue Hills: Evidence from Four U.S. Cities (2004)
Working Paper: Local Revenue Hills: Evidence from Four U.S. Cities (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:pen:papers:03-012

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