Local fiscal competition: An application to sales taxation with multiple federations

Agrawal, David R.

doi:10.1016/j.jue.2015.04.001

Cited by 32 publications

(17 citation statements)

References 81 publications

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“…We nd evidence for the relevance of counties for interactions of local scal policy in a multi-tier federation (Borck, Fossen, Freier, and Martin, 2015;Agrawal, 2015a;Buettner, 2001;Büttner and von Schwerin, forthcoming).…”

Section: Introductionmentioning

confidence: 77%

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Let's Stay in Touch - Evidence on the Role of Social Learning in Local Tax Interactions

Blesse

Martin

2015

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Short-lived reform eects support our ndings that social learning within certain networks intensies tax rate interactions via coordination of local decision makers.

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Section: Introductionmentioning

confidence: 77%

“…Hence, we are among the rst to show that institutions also matter in local tax interactions. Revelli (2003) and Agrawal (2015a), however, show that vertical interactions matter in local taxation for British and US local governments, respectively.…”

Section: Introductionmentioning

confidence: 96%

Let's Stay in Touch - Evidence on the Role of Social Learning in Local Tax Interactions

Blesse

Martin

2015

SSRN Journal

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“…First, not including food sales taxes could have an important omitted variable bias when considering the effect of general sales taxes on employment, payroll, and hiring in areas where the food and beverage stores industry plays an important role in the local economy. Second, the tax competition literature has shown that there are strategic responses in general sales taxes, with local rates responding to state rates as well as the combined local‐state rate of neighboring cross‐border jurisdictions (Agrawal, ; Agrawal & Hoyt, forthcoming). It is not difficult to imagine that similar strategic responses occur in the enactment of food sales tax policy.…”

Section: Literature Reviewmentioning

confidence: 99%

Food sales taxes and employment

Greenhalgh-Stanley

Rohlin

Thompson

2018

Journal of Regional Science

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The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Federal Reserve Bank of Boston. AbstractWe use panel fixed effects estimation with a border approach creating cross-border county pairs to identify changes in food sales tax rates on employment, payroll, and hiring. Results suggest food sales taxes have a negligible effect on overall employment but adverse effects in the food and beverage stores industry. We find younger workers, who are more likely to work in the food and beverage industry, are more adversely affected when a neighboring state has preferential tax treatment for food. We also determine that omitting food sales tax rates when studying general sales tax effects on employment does not bias estimates.

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“…First, after following previous studies in estimating static tax competition results by using state and county sales tax rates, we extend the existing literature by conducting a dynamic panel analysis for the entire United States. Previous studies focus on a cross-sectional analysis at the national level or 1 We follow previous studies, such as Agrawal (2016), and define vertical tax competition as tax competition between a state and county and horizontal tax competition as tax competition between two neighboring jurisdictions. 2 Although they do not do so as prevalently as counties do, smaller jurisdictions such as cities and towns can enact their own sales taxes.…”

Section: Introductionmentioning

confidence: 99%

Dynamic Sales Tax Competition: Evidence from Panel Data at the Border

Gentry¹,

Greenhalgh-Stanley

Rohlin

et al. 2020

Federal Reserve Bank of Boston Research Department Working Papers

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We examine both vertical and horizontal tax competition over time by studying the strategic response of county sales taxation to state sales taxes and to cross-border neighboring municipalities' combined (state and county) taxes. Using county and state sales tax data from 2003 through 2009, we employ both static and dynamic panel analysis as well as an instrumental variables approach in combination with a border analysis. Our results confirm the presence of tax competition in the cross section, as previous studies have found. Results from the fixedeffects and dynamic panel analysis also indicate the presence of vertical competition, though quite small, as counties are consistently responsive to changes in their own state sales tax level across all models and specifications. However, the panel findings suggest little to no horizontal tax competition. Following Parchet (2019), we address additional concerns about endogeneity by instrumenting the neighboring-county sales tax rate with the state-level sales tax rate of the neighboring state. Results from instrumental variables analysis reinforce the presence of a small vertical tax competition between local and state sales tax policies. Interestingly, our results, like those of Parchet (2019), indicate that cross-border local sales tax rates act as strategic substitutes.

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Local fiscal competition: An application to sales taxation with multiple federations

Cited by 32 publications

References 81 publications

Let's Stay in Touch - Evidence on the Role of Social Learning in Local Tax Interactions

Let's Stay in Touch - Evidence on the Role of Social Learning in Local Tax Interactions

Food sales taxes and employment

Dynamic Sales Tax Competition: Evidence from Panel Data at the Border

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