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Do Lodging Taxes Maximize Tax Revenue? Evidence from Ten U.S. Cities

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Listed:
  • Joseph G. Eisenhauer

    (University of Detroit Mercy)

Abstract

Because taxes on lodging are generally not designed to correct market failure, their presumptive purpose is to maximize public revenue; we investigate whether they do so. Using recent estimates of the price elasticity of demand for hotel rooms in ten major U.S. cities, we find that existing tax rates on lodging are generally below the revenue-maximizing tax rates for all but the most expensive luxury hotels. On average, tax rates are 9 to 10 percentage points below the revenue-maximizing level.

Suggested Citation

  • Joseph G. Eisenhauer, 2024. "Do Lodging Taxes Maximize Tax Revenue? Evidence from Ten U.S. Cities," Revista de turism - studii si cercetari in turism / Journal of tourism - studies and research in tourism, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 38(38), pages 1-7.
    • Handle: RePEc:scm:rdtusv:v:38:y:2024:i:38:p:7
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    References listed on IDEAS

    as
    1. Ramesh Durbarry, 2008. "Tourism Taxes: Implications for Tourism Demand in the UK," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 21-36, February.
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