IDEAS home Printed from https://ideas.repec.org/p/fip/fedbwp/01-3.html
   My bibliography  Save this paper

State user costs of capital

Author

Listed:
  • Charles Ian Mead

Abstract

This paper extends the theoretical model of Hall and Jorgenson (1967) in order to examine major changes in state and local tax laws and their effects on the variation in tax burdens across states. A user cost of capital series that accounts for the major provisions of federal and state tax laws is calculated for representative firms in all forty-eight contiguous U.S. states at five-year intervals during the period 1963 to 1997. Previous studies of this topic have been limited to estimates of effective marginal tax rates for only a handful of locations and time periods. The results suggest that state and local tax policies have little effect on the variation in the user cost of capital across states. Further, state and local taxes have a large effect on the variation of effective marginal tax rates across states, which is consistent with what others have found. The implication is that state and local tax policies have little effect on state-specific investment because this variable is likely to be more directly related to the investment decisions of firms.

Suggested Citation

  • Charles Ian Mead, 2001. "State user costs of capital," Working Papers 01-3, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbwp:01-3
    as

    Download full text from publisher

    File URL: http://www.bostonfed.org/economic/wp/wp2001/wp013.htm
    Download Restriction: no

    File URL: http://www.bostonfed.org/economic/wp/wp2001/wp013.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
    2. Holden, Darryl R & Nairn, Alasdair G M & Swales, J K, 1989. "Shift-Share Analysis of Regional Growth and Policy: A Critique," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(1), pages 15-34, February.
    3. Robert Tannenwald, 1996. "State business tax climate: how should it be measured and how important is it?," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 23-38.
    4. Papke, Leslie E., 1991. "Interstate business tax differentials and new firm location : Evidence from panel data," Journal of Public Economics, Elsevier, vol. 45(1), pages 47-68, June.
    5. Don Fullerton, 1983. "Which Effective Tax Rate?," NBER Working Papers 1123, National Bureau of Economic Research, Inc.
    6. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-449, August.
    7. Peter S. Fisher & Alan H. Peters, 1998. "Industrial Incentives: Competition among American Cities and States," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ii, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bental, Benjamin & Demougin, Dominique, 2010. "Declining labor shares and bargaining power: An institutional explanation," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 443-456, March.
    2. Christian Nsiah & Chen Wu & Walter Mayer, 2012. "An analysis of US State’s export performance in the Asian Market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(2), pages 533-550, October.

    More about this item

    Keywords

    State finance ; Taxation;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbwp:01-3. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio). General contact details of provider: http://edirc.repec.org/data/frbbous.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.