On Estimating Marginal Tax Rates and Tax Progressivities for U.S. States
AbstractThis research presents a simple procedure for improving state-specific estimates of marginal tax rates (MTRâ€™s). Most research employing MTRâ€™s follows a procedure developed by Koester and Kormendi (K&K, 1987). Unfortunately, the time-invariant nature of the K&K estimates precludes their use as explanatory variables in panel data studies. Furthermore, their estimates are not based on statutory tax parameters. In contrast, our procedure produces timevarying estimates of MTRâ€™s that are directly related to observed changes in statutory tax parameters. Using comprehensive data on state tax policy parameters, our procedure produces state-specific MTRâ€™s estimates for all 50 states over the years 1977-2004. We compare our refined MTRâ€™s to alternative estimates and evaluate implications for estimating tax progressivity for US states.
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Bibliographic InfoPaper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 08/17.
Length: 44 pages
Date of creation: 08 Aug 2008
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State tax revenues; Marginal tax rates; Tax burden; Tax progressivity; Economic growth.;
Find related papers by JEL classification:
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-13 (All new papers)
- NEP-PBE-2008-10-13 (Public Economics)
- NEP-PUB-2008-10-13 (Public Finance)
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