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Political Parties and the Tax Level in the American States: A Regression Discontinuity Design

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  • Leandro M. de Magalhães

Abstract

With a regression discontinuity design I show that the partisan identity of the majority in the state House of Representatives has no causal effect on the tax level. This result goes against recent findings in the political economy literature. In the state Senate I find a significant discontinuity in the tax level, but I also find a discontinuity in the density of the forcing variable - which implies that we can not interpret the discontinuity in the Senate as a causal relation. Another contribution of the paper is to investigate under which conditions slim majorities in the American states (as opposed to close election) are appropriate for a regression discontinuity design.

Suggested Citation

  • Leandro M. de Magalhães, 2011. "Political Parties and the Tax Level in the American States: A Regression Discontinuity Design," Bristol Economics Discussion Papers 11/622, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:11/622
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    References listed on IDEAS

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    Cited by:

    1. Niklas Potrafke, 2018. "Government ideology and economic policy-making in the United States—a survey," Public Choice, Springer, vol. 174(1), pages 145-207, January.

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    More about this item

    Keywords

    Regression discontinuity design; Democrats; Republicans; divided government; line item veto; tax level.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H1 - Public Economics - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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