This paper examines the impact of state and local tax differentials on the location of industry using a panel data set of manufacturing firm startups. The number of firm births is modeled as a Poisson count process and the estimation technique explicitly accounts for unobserved location or state heterogeneity in the estimation. A second focus of the analysis is the development of an industry and year specific series of effective tax rates for each state. After controlling for state and industry effects, the estimates indicate that a high state marginal effective tax rate reduces the number of firm births for most industries examined.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
3184.
Length: Date of creation: Oct 1991 Date of revision: Handle: RePEc:nbr:nberwo:3184
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