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Strategic Fiscal Interdependence: County and Municipal Adoptions of Local Option Sales Taxes

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  • Burge, Gregory S.
  • Piper, Brian

Abstract

This study contributes to the tax competition literature by investigating the determinants of local option sales tax (LOST) adoptions using a model that simultaneously accounts for the presence of horizontal and vertical fiscal interactions. We use discrete time Cox Proportional Hazard regressions to study adoption patterns for county and municipal LOSTs in an environment where municipalities were authorized to implement LOSTs nearly two decades before counties. Controlling for factors measuring fiscal stress and the jurisdiction’s ability to export its taxes, we demonstrate that both vertical and horizontal fiscal spillovers play an important role in characterizing the strategic interdependence of local governments when they tax a common retail sales base.

Suggested Citation

  • Burge, Gregory S. & Piper, Brian, 2012. "Strategic Fiscal Interdependence: County and Municipal Adoptions of Local Option Sales Taxes," National Tax Journal, National Tax Association, vol. 65(2), pages 387-415, June.
    • Handle: RePEc:ntj:journl:v:65:y:2012:i:2:p:387-415
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Agrawal, David R., 2014. "LOST in America: Evidence on local sales taxes from national panel data," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 147-163.
    3. repec:ntj:journl:v:70:y:2017:i:2:p:367-392 is not listed on IDEAS
    4. Emefa Sewordor & David L. Sjoquist, 2016. "Lights, Camera, Action: The Adoption of State Film Tax Credits," Public Budgeting & Finance, Wiley Blackwell, vol. 36(2), pages 5-25, June.
    5. repec:bla:pbudge:v:37:y:2017:i:4:p:25-46 is not listed on IDEAS
    6. Hawley, Zackary & Rork, Jonathan C., 2015. "Competition and property tax limit overrides: Revisiting Massachusetts' Proposition 2½," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 93-107.
    7. David R. Agrawal, 2015. "The Tax Gradient: Spatial Aspects of Fiscal Competition," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 1-29, May.

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