Correlation in State and Local Tax Changes

33 Pages Posted: 10 Aug 2020

Date Written: July 10, 2020


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, in response to business cycles, and to what extent different taxes co-move within a state or locality. Across states and local jurisdictions, large differences in the mix of taxes are observed, and these differences have tended to become more pronounced over time. Moreover, we note that different types of taxes tend to co-move within a state or local jurisdiction, highlighting the importance for researches to take into account the entirety of the tax system, rather than just a single tax type, when examining household or firm responses to state and local tax changes. At both a state and local level, increases in tax rates of all types tend to increase tax revenue but worsen business conditions and employment.

Keywords: Local taxes, state taxes, income tax, corporate income tax, sales tax, property tax

JEL Classification: H20, H71, H72, H77

Suggested Citation

Baker, Scott R. and Janas, Pawel and Kueng, Lorenz, Correlation in State and Local Tax Changes (July 10, 2020). Available at SSRN: or

Scott R. Baker (Contact Author)

Northwestern University, Kellogg School of Management, Department of Finance ( email )

Evanston, IL 60208
United States

Pawel Janas

Kellogg School of Management - Department of Finance ( email )

Evanston, IL 60208
United States

Lorenz Kueng

University of Lugano - Faculty of Economics

Via Giuseppe Buffi 13
Lugano, TI 6904


Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4


National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States


Centre for Economic Policy Research (CEPR)

United Kingdom


Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
+1 (847) 491-7843 (Phone)
+1 (847) 491-5719 (Fax)


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