The Volatility of School District Income Tax Revenues: Is Tax Base Diversification a Good Idea?

Joshua Hall and Antonios Koumpias

No 15-14, Working Papers from Department of Economics, West Virginia University

Abstract: School districts typically derive their own-source revenue from the property tax. Ohio is a prominent exception as local school districts have the option of diversifying their revenue base by adopting a residency-based income tax. While diversification has clear benefits, a potential downside is greater revenue volatility. Using a panel of 609 Ohio school districts from 1990 to 2008, we find that while school district revenues from the income tax are pro-cyclical, they fluctuate mildly. We also find that for every dollar increase in school district income, revenues from the income tax increased by 25 cents per pupil.

Keywords: revenue volatility; tax base diversification; Ohio; short-run elasticity (search for similar items in EconPapers)
JEL-codes: H71 H75 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2015-06
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
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