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Full-Text Articles in Social and Behavioral Sciences
Assessing The Federal Deduction For State And Local Tax Payments, Gilbert E. Metcalf
Assessing The Federal Deduction For State And Local Tax Payments, Gilbert E. Metcalf
Gilbert E. Metcalf
This paper examines the distributional and behavioral impacts of ending the deductibility of state and local taxes against the federal individual income tax. I carry out a number of distributional analyses — considering both variation across income and across states — of the subsidy from deductibility as well as the distributional impact of potential partial reforms. I also consider how behavioral responses affect the distributional analysis. Using a large panel of data on state and local governments, I find that deductibility increases reliance on deductible taxes and increases state and local spending out of own-source revenue.
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 …