Tax Burden and the Mismeasurement of State Tax Policy

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dc.contributor.authorReed, W.R.
dc.contributor.authorRogers, C.L.
dc.date.accessioned2008-07-21T21:40:31Z
dc.date.available2008-07-21T21:40:31Z
dc.date.issued2005en
dc.description.abstractTax Burden, defined as the ratio of total tax revenues over personal income, is frequently used to measure state tax policy. We analyze the empirical relationship between changes in Tax Burden and changes in tax policies from 1987 to 2000 using states’ forecasts of revenue impacts of new tax legislation. Our two major findings have important implications. First, we demonstrate that income-induced, non-tax policy changes are a significant determinant of changes in Tax Burden. These income effects are likely to cause misinterpretation when Tax Burden is used as a variable in economic growth regressions. Second, we estimate that approximately half of the total variation in Tax Burden is due to changes in non-tax policy factors. This finding quantifies the extent of the “mismeasurement” problem which has been discussed, but not analyzed, in previous literature. In concluding, we promote the use of alternative approaches for estimating the economic effects of taxes.en
dc.identifier.citationReed, W.R., Rogers, C.L. (2005) Tax Burden and the Mismeasurement of State Tax Policy. Research Papers in Economics. 38pp.en
dc.identifier.urihttp://hdl.handle.net/10092/728
dc.language.isoen
dc.publisherResearch Papers in Economicsen
dc.publisherUniversity of Canterbury. Economics.en
dc.rights.urihttps://hdl.handle.net/10092/17651en
dc.subjectTax policyen
dc.subjectFiscal policyen
dc.subjectTax burdenen
dc.subjectTax ratesen
dc.subjectState economic developmenten
dc.subject.marsdenFields of Research::340000 Economics::340200 Applied Economics::340203 Finance economicsen
dc.subject.marsdenFields of Research::340000 Economics::349900 Other Economics::349901 Political economyen
dc.titleTax Burden and the Mismeasurement of State Tax Policyen
dc.typeDiscussion / Working Papers
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