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Correlation in State and Local Tax Changes

Author

Listed:
  • Scott R. Baker

    (Northwestern University, Kellogg School of Management, Department of Finance)

  • Pawel Janas

    (Kellogg School of Management - Department of Finance)

  • Lorenz Kueng

    (University of Lugano - Faculty of Economics; Swiss Finance Institute; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Northwestern University - Kellogg School of Management)

Abstract

We develop a comprehensive dataset of state and local taxes from 2000-2015 that includes personal income taxes, property taxes, corporate income taxes, sales taxes, estate taxes and excise taxes. We illustrate how state and local taxes have changed over time, in response to business cycles, and to what extent different taxes co-move within a state or locality. Across states and local jurisdictions, large differences in the mix of taxes are observed, and these differences have tended to become more pronounced over time. Moreover, we note that different types of taxes tend to co-move within a state or local jurisdiction, highlighting the importance for researches to take into account the entirety of the tax system, rather than just a single tax type, when examining household or firm responses to state and local tax changes. At both a state and local level, increases in tax rates of all types tend to increase tax revenue but worsen business conditions and employment.

Suggested Citation

  • Scott R. Baker & Pawel Janas & Lorenz Kueng, 2020. "Correlation in State and Local Tax Changes," Swiss Finance Institute Research Paper Series 20-115, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp20115
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    References listed on IDEAS

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    Cited by:

    1. Robinson, Sarah & Tazhitdinova, Alisa, 2025. "One hundred years of U.S. state taxation," Journal of Public Economics, Elsevier, vol. 241(C).

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    More about this item

    Keywords

    Local taxes; state taxes; income tax; corporate income tax; sales tax; property tax;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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