Economic Effects of Eliminating Texas' Business Margin Tax

Texas Public Policy Foundation, pp. 1-20, March 2015

20 Pages Posted: 10 Mar 2015

See all articles by Vance Ginn

Vance Ginn

Texas Public Policy Foundation

Talmadge Heflin

Texas Public Policy Foundation

Date Written: March 1, 2015

Abstract

Studies modeling the dynamic fiscal and economic effects of phasing out or repealing Texas' business margin tax find substantial economic benefits. These include potentially tens of thousands of net new private sector jobs created and billions in net new investment and personal income across Texas, increasing sales tax and other tax revenues that could replace much of — if not all — the loss from eliminating the margin tax.

Building on the capital and margin tax literature, this paper considers a vector autoregressive model that estimates the responses of real personal income and private sector nonfarm job creation statewide to eliminating this costly tax. Given a 2014 baseline, our forecast results support the findings in previous research that eliminating the margin tax could be highly beneficial for all Texans.

Keywords: State Business Taxes, Fiscal Policy, Comparative Tax Policy

JEL Classification: H71, H25, H72, C32

Suggested Citation

Ginn, Vance and Heflin, Talmadge, Economic Effects of Eliminating Texas' Business Margin Tax (March 1, 2015). Texas Public Policy Foundation, pp. 1-20, March 2015. Available at SSRN: https://ssrn.com/abstract=2575996

Vance Ginn (Contact Author)

Texas Public Policy Foundation ( email )

901 Congress Avenue
Austin, TX 78701
United States
7134785255 (Phone)

HOME PAGE: http://www.texaspolicy.com/experts/detail/vance-ginn

Talmadge Heflin

Texas Public Policy Foundation

900 Congress Avenue
Suite 400
Austin, TX 78701
United States

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