Sales Taxes and Prices: An Empirical Analysis
AbstractWe employ a unique data source to examine the incidence of sales taxes. The main idea is to take information on the prices of specific commodities in different U.S. cities and to examine the extent to which differences in tax rates and bases are reflected in prices, controlling for other factors (such as costs). We find a surprising variety of shifting patterns. For some commodities, the after-tax price increases by exactly the amount of the tax, a result consistent with the standard competitive model. However, taxes on other commodities are overshifted--an increase in tax revenue of one dollar per unit increases the price by more than one dollar.
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Bibliographic InfoArticle provided by National Tax Association in its journal National Tax Journal.
Volume (Year): 52 (1999)
Issue (Month): n. 2 (June)
Other versions of this item:
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
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