The Effect of Federal Tax Deductibility on State and Local Taxes and Spending
AbstractThis paper examines the effect of federal deductibility of state and local taxes on the fiscal behavior of state and local governments. The primary finding is that deductibil ity affects the way that state and local governments finance their sp ending as well as the overall level of spending. More specifically, i n states in which federal deductibility implies a relatively low cost of using deductible personal taxes (including income, sales, and pro perty taxes), there is greater reliance on those taxes and less relia nce on business taxes and other revenue sources. The effect of deduct ibility on the state and local financial mix implies that deductibili ty has a much lower cost to the federal government than has previousl y been assumed. Copyright 1987 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 95 (1987)
Issue (Month): 4 (August)
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Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- Martin Feldstein & Gilbert Metcalf, 1987. "The Effect of Federal Tax Deductibility on State and Local Taxes and Spending," NBER Working Papers 1791, National Bureau of Economic Research, Inc.
- Metcalf, Gilbert & Feldstein, Martin, 1987. "The Effect of Federal Tax Deductibility on State and Local Taxes and Spending," Scholarly Articles 2766699, Harvard University Department of Economics.
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