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Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing?

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  • Daria Burnes
  • David Neumark
  • Michelle J. White

Abstract

Using data from Florida counties, we test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores rises significantly in jurisdictions where sales tax rates increase. We also find that manufacturing employment falls significantly in these jurisdictions. These results suggest that local officials in jurisdictions with higher sales tax rates concentrate on attracting large stores and shopping centers, and that their efforts crowd out manufacturing. Our results suggest that an increase of 1 percentage point in a county-level local sales tax rate will result in 258 additional retail jobs and the loss of 838 manufacturing jobs.

Suggested Citation

  • Daria Burnes & David Neumark & Michelle J. White, 2014. "Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(1), pages 7-50, March.
    • Handle: RePEc:ntj:journl:v:67:y:2014:i:1:p:7-50
    DOI: 10.17310/ntj.2014.1.01
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    1. Higher local sale tax leads to more local retail activity
      by Economic Logician in Economic Logic on 2011-05-26 21:38:00

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    Cited by:

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    3. Gian-Claudia Sciara & Kristin Lovejoy & Susan Handy, 2018. "The Impacts of Big Box Retail on Downtown: A Case Study of Target in Davis (CA)," Journal of the American Planning Association, Taylor & Francis Journals, vol. 84(1), pages 45-60, January.
    4. Yugang Tang & Zhihao Su & Yilin Hou & Zhendong Yin, 2023. "Tax Streams, Land Rents and Urban Land Allocation," CESifo Working Paper Series 10812, CESifo.
    5. Fugang Gao & Huub Ploegmakers & Erwin van der Krabben & Xiaoping Shi, 2022. "Impacts of the political incentive for environmental protection on industrial land supply: Evidence from the cadre evaluation system reform in China," Papers in Regional Science, Wiley Blackwell, vol. 101(4), pages 1001-1025, August.
    6. Dan S. Rickman, 2013. "Should Oklahoma Be More Like Texas? A Taxing Decision," The Review of Regional Studies, Southern Regional Science Association, vol. 43(1), pages 1-22, Summer.
    7. Sciara, Gian-Claudia, 2015. "Measuring Land Use Performance: Policy, Plan, and Outcome," Institute of Transportation Studies, Working Paper Series qt9w64r1qz, Institute of Transportation Studies, UC Davis.
    8. Agrawal, David R., 2016. "Local fiscal competition: An application to sales taxation with multiple federations," Journal of Urban Economics, Elsevier, vol. 91(C), pages 122-138.
    9. Rohlin, Shawn & Rosenthal, Stuart S. & Ross, Amanda, 2014. "Tax avoidance and business location in a state border model," Journal of Urban Economics, Elsevier, vol. 83(C), pages 34-49.

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