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Full-Text Articles in Social and Behavioral Sciences
Tax Exporting, Federal Deductibility, And State Tax Structure, Gilbert E. Metcalf
Tax Exporting, Federal Deductibility, And State Tax Structure, Gilbert E. Metcalf
Gilbert E. Metcalf
This paper studies the interaction between the federal and state tax systems during the 1980s and, in particular, considers how the Tax Reform Act of 1986 affected state tax structure. Using a panel data set on state governments over a nine-year period, I estimate tax share equations for six categories of taxes. I find that the state personal income tax is sensitive to changes in its tax price, but find a much smaller sensitivity to changes in tax prices for the general sales tax. I then consider various reasons why the sales tax does not exhibit a sensitivity to changes …
Energy Conservation Investment: Do Consumers Discount The Future Correctly?, Gilbert E. Metcalf, Kevin A. Hassett
Energy Conservation Investment: Do Consumers Discount The Future Correctly?, Gilbert E. Metcalf, Kevin A. Hassett
Gilbert E. Metcalf
We argue that the apparently high discount rates attributed to investors making energy conservation investments are not irrational or the result of some market failure. Rather they may result from an investor recognizing that many conservation investments entail substantial sunk costs. In the presence of these costs and uncertainty over future conservation savings, consumers should use a higher hurdle rate for investment than if there were no uncertainty. Simulations suggest that the hurdle rate should be about four times greater than the standard rate. An implication of our model is that tax subsidies for the purchase of conservation capital are …