LOST Stability? Consumption Taxes and the Cyclical Variability of State and Local Revenues

Please use this identifier to cite or link to this item: http://hdl.handle.net/1811/46881

Show full item record

Files Size Format View Description
gs_wps_Hou_Seligman_2010-002.pdf 567.1Kb PDF View/Open paper

Title: LOST Stability? Consumption Taxes and the Cyclical Variability of State and Local Revenues
Creators: Hou, Yilin; Seligman, Jason S.
Keywords: state government
local government
own-source revenue
volatility
cyclical variability
Issue Date: 2010-09
Publisher: John Glenn School of Public Affairs
Series/Report no.: John Glenn School of Public Affairs. Working Paper Series. September 2010
Abstract: States and localities continue moving towards consumption taxes. Georgia’s local governments displace a portion of their property tax receipts with revenue from the Local Option Sales Tax. This paper employs a panel dataset of Georgia counties across two economic cycles to examine the effects of consumption taxes on the long- and short-run volatility of local own-source revenues. We offer a mean-variance approach for considering correct revenue portfolio shares across tax-instruments. Holding revenues constant we find that permanent substitution towards a consumption tax amplifies variability of own-source revenues, implying that consumption taxes are overweighed in current revenue portfolios.
URI: http://hdl.handle.net/1811/46881
Other Identifiers: 2010-002
Bookmark and Share
Attribution-NonCommercial-NoDerivs 3.0 Unported This item is licensed under a Creative Commons License:
Attribution-NonCommercial-NoDerivs 3.0 Unported