Are high taxes restricting Indiana’s growth?

John Tatom

MPRA Paper from University Library of Munich, Germany

Abstract: A program sponsored by the Indiana Economic Development Corporation aims to increase the quantity and quality of available human resourcesby encouraging former residents to come back. Indiana’s population growth has been weak relative to the rest of the country. Over the next 25 years US population growth is expected to slow (0.8 percent per year) and Indiana’s is expected to fall back more sharply (to 0.3 percent per year). Such slow growth in population and the workforce will curtail the pace of expansion of overall output and income in the US and all the more so in Indiana. A broader effort could usefully focus on recruiting others to migrate to Indiana or on inducing existing residents to stay. In-migration rates are strongly affected by state and local tax rates. A cross section analysis shows that each one percentage point rise in the tax rate will reduce the in-migration rate, and population and employment growth, by 0.41 percentage points. Modest cuts in state and local taxes could boost population growth to the national average, staving off decline in population and employment growth.

Keywords: migration rate; taxes; growth; demographics (search for similar items in EconPapers)
JEL-codes: H3 H71 J1 (search for similar items in EconPapers)
Date: 2007-05-01
New Economics Papers: this item is included in nep-mig
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https://mpra.ub.uni-muenchen.de/4307/1/MPRA_paper_4307.pdf original version (application/pdf)

Related works:
Working Paper: Are High Taxes Restricting Indiana’s Growth? (2006)
Working Paper: Are High Taxes Restricting Indiana’s Growth? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:4307

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