Abstract

http://ssrn.com/abstract=162892
 
 

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Coveting Thy Neighbor?s Manufacturing: The Dilemma of State Income Apportionment


Austan Goolsbee


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Edward L. Maydew


University of North Carolina at Chapel Hill - Accounting Area


Journal of Public Economics

Abstract:     
This paper examines the economic impact of the apportionment formulae used to divide corporate income taxes among the states. Since such formulae usually include total payroll, they transform, at least partially, the state corporate income tax into a direct factor tax on payroll. Using panel data from 1978-1994 on state-level employment in manufacturing and other sectors, the results show that this distortion has an important impact, in practice. For the average state, moving from equal-weighted sales to double weighted sales increases manufacturing employment more than 1%. The results also suggest that apportionment changes have important negative externalities on other states. When a state lowers its payroll weight, this increases state within-state employment but reduces out-of-state employment. The aggregate effects are close to zero.

Note: This is a description of the paper and not the actual abstract.

JEL Classification: H22, H25, H23

Accepted Paper Series


Not Available For Download

Date posted: May 25, 1999  

Suggested Citation

Goolsbee, Austan and Maydew, Edward L., Coveting Thy Neighbor?s Manufacturing: The Dilemma of State Income Apportionment. Journal of Public Economics. Available at SSRN: http://ssrn.com/abstract=162892

Contact Information

Austan Goolsbee
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5869 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Edward L. Maydew (Contact Author)
University of North Carolina at Chapel Hill - Accounting Area ( email )
McColl Building
Chapel Hill, NC 27599-3490
United States
919-843-9356 (Phone)
919-962-4727 (Fax)
HOME PAGE: http://www.kenan-flagler.unc.edu/Faculty/search/detail.cfm?person_id=51

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