Local Revenue Hills: Evidence from Four U.S. Cities

Haughwout, Andrew F.; Inman, Robert P.; Craig, Steven G.; Luce, Thomas

doi:10.1162/003465304323031120

Cited by 43 publications

(18 citation statements)

References 13 publications

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“…The strong tendency of richer people to live outside of city borders suggests that they are voting with their feet within certain areas. Haughwout et al (2004) argue that these migration tendencies are quite strong and can mean that areas can actually lose revenue by raising taxes. Feldstein and Wrobal (1998) argue that the migration elasticities are so strong that states cannot effectively redistribute income at all.…”

Section: Government Policies and Local Inequalitymentioning

confidence: 99%

Urban Inequality

Glaeser¹,

Resseger²,

Tobio³

2008

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What impact does inequality have on metropolitan areas? Crime rates are higher in places with more inequality, and people in unequal cities are more likely to say that they are unhappy. There is also a negative association between local inequality and the growth of both income and population, once we control for the initial distribution of skills. What determines the degree of inequality across metropolitan areas? Twenty years ago, metropolitan inequality was strongly associated with poverty, but today, inequality is more strongly linked to the presence of the wealthy. Inequality in skills can explain about one third of the variation in income inequality, and that skill inequality is itself explained by historical schooling patterns and immigration. There are also substantial differences in the returns to skill, related to local concentrations in different industries, and these too are strongly correlated with inequality.

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Section: Government Policies and Local Inequalitymentioning

confidence: 99%

Urban Inequality

Glaeser¹,

Resseger²,

Tobio³

2008

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“…On the other hand, local income tax surprisingly bears no relationship with local sales or meals tax. This is presumably because high- 15 The result from Haughwout et al (2004) might not apply to Massachusetts, because the effect could vary from state to state. In addition, the current paper does not adjust for potential employment relocations across the state border and associated wage losses, because existing literature is silent on the border effect for the payroll tax.…”

Section: Resultsmentioning

confidence: 99%

“…the per capita wage does not change with the imposition of a local payroll tax. Haughwout et al (2004) is the only paper found that estimates the elasticity of the per capita wage with respect to changes in the wage tax rate in the United States.…”

Section: Datamentioning

confidence: 99%

The Fiscal Impact of Potential Local-Option Taxes in Massachusetts

Zhao

2010

SSRN Journal

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Municipal governments in Massachusetts have experienced difficulties raising adequate revenues to meet their expenditure needs. Responding to these challenges, policymakers have been investigating additional revenue sources for municipalities, such as new local-option taxes. Using a Representative Tax System approach and new data, this paper examines the impact of local-option taxes on meals, general sales, income, and payroll on revenue-raising capacity of Massachusetts municipalities. This paper shows that new local-option taxes would help municipalities generate considerable additional revenues from untapped sources. However, revenue capacity from new local-option taxes is not evenly distributed across municipalities. Local-option tax capacity is concentrated in Boston suburbs and resort areas in eastern Massachusetts. On average, large cities would benefit more from local sales, meals, and payroll taxes than smaller towns. High-income, property-rich municipalities would gain more local-option tax capacity than low-income, property-poor municipalities. Local-option taxes also do not compensate municipalities in proportion to their loss of state aid dollars in FY 2009. Local-option taxes are likely to exacerbate fiscal disparities, because municipalities with low existing revenue-raising capacity often lack the tax bases for new local-option taxes. Policymakers could consider increasing equalizing state aid to offset these fiscal disparities. If more aid is not forthcoming, this paper proposes that the state change aid formulas to reflect differences across municipalities in local-option tax capacity, and to better target fiscally distressed communities. These strategies-explored in the Massachusetts context-could also be useful in other states.

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“…Successful and wealthy entrepreneurs with high incomes may be repelled by high income taxes, thus reducing the local supply of entrepreneurs (e.g., Haughwout et al 2004). Even entrepreneurs in low-skilled industries who choose sole proprietorship as the legal form may be more inclined to choose cities with low income taxes as their place of residence.…”

Section: Direct Effectmentioning

confidence: 99%

Local Competitiveness Fostered through Local Institutions for Entrepreneurship

Andersson

Henrekson

2015

The Oxford Handbook of Local Competitiveness

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe review and assess the role local institutional framework conditions play in fostering local entrepreneurship. The basic premise is that entrepreneurship is a central driver of economic renewal and change, and that institutions affect both the supply and direction of entrepreneurship. While local institutions always develop and operate against the backdrop of national institutional frameworks, in particular in non-federal states, our review shows that there is plenty of room for local initiatives and policies to influence the entrepreneurial climate locally. This pertains to both formal (e.g., taxes, regulations and stringency of enforcement) and informal (e.g., attitudes and social legitimacy) institutions. We further argue that the local institutional environment is essential in any local policy aimed to foster productive (high-impact) entrepreneurship. Favorable local institutions not only increase the odds that a region develops or manage to attract entrepreneurial incumbents, but also the odds that a region reaps the full potential of hosting entrepreneurial and knowledge-intensive activities.

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Local Revenue Hills: Evidence from Four U.S. Cities

Cited by 43 publications

References 13 publications

Urban Inequality

Urban Inequality

The Fiscal Impact of Potential Local-Option Taxes in Massachusetts

Local Competitiveness Fostered through Local Institutions for Entrepreneurship

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