Coveting Thy Neighbors' Taxation
AbstractRecent research has shown that a state’s overall tax burden is dependent on that of neighboring states. By disaggregating a state’s tax burden into its individual components, this paper demonstrates that during the period of 1967–1996, state taxes with a mobile tax base had positive response rates as high as 60 percent. Thus, a 10 percent increase in neighboring states’ rates was met by an increase of up to 6 percent in the home state’s rate. Taxes with relatively immobile tax bases exhibit negative responsiveness, meaning that states respond to rate increases in neighboring states by decreasing home rates.
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Bibliographic InfoArticle provided by National Tax Association in its journal National Tax Journal.
Volume (Year): 56 (2003)
Issue (Month): 4 (December)
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- Katherine Baicker, 2001. "The Spillover Effects of State Spending," NBER Working Papers 8383, National Bureau of Economic Research, Inc.
- Anne Case, 1993. "Interstate tax competition after TRA86," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 12(1), pages 136-148.
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