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The Volatility of School District Income Tax Revenues: Is Tax Base Diversification a Good Idea?

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  • Joshua Hall

    (West Virginia University, College of Business and Economics)

  • Antonis Koumpias

    (Georgia State University, Department of Economics)

Abstract

School districts typically derive their own-source revenue from the property tax. Ohio is a prominent exception as local school districts have the option of diversifying their revenue base by adopting a residency-based income tax. While diversification has clear benefits, a potential downside is greater revenue volatility. Using a panel of 609 Ohio school districts from 1990 to 2008, we find that while school district revenues from the income tax are pro-cyclical, they fluctuate mildly. We also find that for every dollar increase in school district income, revenues from the income tax increased by 25 cents per pupil.

Suggested Citation

  • Joshua Hall & Antonis Koumpias, 2015. "The Volatility of School District Income Tax Revenues: Is Tax Base Diversification a Good Idea?," Working Papers 15-14, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:15-14
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    File URL: http://busecon.wvu.edu/phd_economics/pdf/15-14.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    revenue volatility; tax base diversification; Ohio; short-run elasticity;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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