This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Reed, W. R. Articles by Rogers, C. L. Search for Related Content Social Bookmarking                         What's this?

Tax Burden and the Mismeasurement of State Tax Policy

University of Canterbury, New Zealand

Cynthia L. Rogers

University of Oklahoma

Tax Burden, defined as the ratio of total tax revenues over personal income, is frequently used to measure state tax policy. The authors 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. Their two major findings have important implications. First, they demonstrate that income-induced, nontax 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, they estimate that approximately half of the total variation in Tax Burden is due to changes in nontax policy factors. This finding quantifies the extent of the "mismeasurement" problem that has been discussed, but not analyzed, in previous literature. In concluding, the authors promote the use of alternative approaches for estimating the economic effects of taxes.

Key Words: tax policy • fiscal policy • Tax Burden • state economic development • tax rates

Public Finance Review, Vol. 34, No. 4, 404-426 (2006)
DOI: 10.1177/1091142106288406


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?