Correlation in State and Local Tax Changes
36 Pages Posted: 10 Aug 2020 Last revised: 23 May 2023
There are 2 versions of this paper
Correlation in State and Local Tax Changes
Date Written: March 1, 2023
Abstract
We develop a comprehensive dataset of state and local taxes from 2000--2015 that includes personal income taxes, property taxes, corporate income taxes, sales taxes, estate taxes and excise taxes. We illustrate how state and local taxes have changed over time, over business cycles, and to what extent different taxes co-move within a state or county. We document large differences in the mix of taxes across states and local jurisdictions and note that these differences have become more pronounced over time. Political ideology has strong predictive power over changes in tax rates, and these effects vary substantially across tax types. Moreover, we find that taxes of different types tend to co-move within a jurisdiction, highlighting the importance for researchers to take into account the entirety of the tax system, rather than just a single tax type, when examining responses to tax changes.
Keywords: Local taxes, state taxes, income tax, corporate income tax, sales tax, property tax, excise tax
JEL Classification: H20, H71, H72, H77
Suggested Citation: Suggested Citation