On the political economy of state corporate tax reforms in the U.S

Eliakim Kakpo

MPRA Paper from University Library of Munich, Germany

Abstract: This paper discusses the political economy of U.S. state corporate tax reforms. Using a unique dataset of state effective corporate tax rates over the period 1969-2015, I observe that business tax changes are associated with tax competition, swings in economic cycles, and left-right political ideology. In contrast, long-term debt and budgetary pressures do not correlate with state corporate tax policies. Moreover, I document a regional heterogeneity and notice a slowdown in state tax changes after the Federal Reform Act of 1986. These findings matter for the empirics of corporate tax incidence, which is increasingly concerned with the endogeneity between tax reforms and other economic developments.

Keywords: Tax reform; Tax competition; Tax incidence; State public debt; State budget (search for similar items in EconPapers)
JEL-codes: H71 H72 H73 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-pbe and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:94986

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