مقاله انگلیسی رایگان در مورد مالیات فروش محلی، اشتغال و رقابت مالیاتی – الزویر 2018

Most analysis of the economic impacts of sales taxes does not include local taxes, despite the fact that they account for one-fifth of all sales tax collections and vary widely across states. This paper addresses that omission, estimating the effect of sales taxes on employment at state borders using county-level quarterly data and a newly developed data set of local county tax rates. The findings indicate that sales tax increases, relative to cross-border neighbors, lead to losses of employment, as well as payroll and hiring, but these effects are only found in counties with large shares of residents working in another state. The employment effects are also likely to be relatively short-lived, as they occur in the period before tax competition occurs and competitive jurisdictions are able to strategically respond and minimize cross-border tax differentials. Comparing estimates of sales tax effects with and without local county sales taxes show that omitting county taxes does not lead to meaningfully different estimates.

Introduction

State borders are commonly used to explore the impacts of taxation, as they represent both sharp differences in rates as well as heightened opportunity for responses of households and firms (Mikesell, 1970; Mikesell, 1971, Holmes, 1998; Rohlin et al., 2014). This is especially true in the case of sales taxes, where inter-state rate differentials might motivate residents to simply cross the border to shop, depriving a state of tax revenues, retail sales, and potentially jobs (Fox, 1986; Hoyt and Harden, 2005). In fact, the rate differentials between neighboring states are large in many cases, with state general sales tax rates ranging from zero (in four states) to 8.25 percent. Each of the continental states without a sales tax borders at least one other state with a rate of 6 percent or higher (Fig. 1). Furthermore, a relatively large empirical literature, recently surveyed by Leal et al. (2010), provides evidence the households are willing to shop across borders if price differences are sufficiently large. The study of the economic costs of sales taxes is complicated, however, by a number of factors. First, most studies fail to account for the existence of local county sales taxes, which are often substantial and can either offset or exacerbate actual cross-border rate differences. Thompson and Rohlin (2012), for example, finds a strong negative effect of states sales taxes on employment, but does not control for local county rates, which could bias the results.2 There is reason to think that the bias could be non-trivial, as two thirds of border counties in states with sales taxes have a local county tax, and rates range from 0.5 to 5.0 percent (in 2009). Local taxes account for one fifth of all state and local government sales tax revenue (Census, 2015). Second, sales taxes, particularly local county taxes, could be endogenously determined. Specifically, there is a concern that changes in state and county sales taxes are correlated with the health of the local economy and are therefore endogenous. The bias is ambiguous because it could be that policy makers in healthy local economies feel their areas can withstand a sales tax increase or it could be that distressed areas more likely to raise their sales taxes because of a need of tax revenue generation. Relatedly, there is a strong possibility that states, counties and cities strategically respond to their cross-border neighbors’ tax policies. This strategic response, documented in Agrawal (2015) represents another source of potential bias. Finally, it is unlikely that the most commonlyused distance measures, cross-border contiguity, and linear distance, are very good proxies for the economic costs influencing household shopping behavior.