Tax avoidance and business location in a state border model

Rohlin, Shawn M.; Rosenthal, Stuart S.; Ross, Amanda

doi:10.1016/j.jue.2014.06.003

Cited by 84 publications

(70 citation statements)

References 32 publications

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“…Our results are similar in magnitude to Mukherjee et al (2017) who find states that increased corporate tax rates saw a decline in patenting activity and new product activity of 5 percent. While not directly comparable, our results suggests a somewhat smaller effect of corporate taxes than Rohlin et al (2014) who find that when reciprocal agreements exist between states new establishments are 34 percentage points less likely to locate on the side of the border with a one percentage point higher corporate tax rate. Using a different time-frame, Ljungqvist & Smolyansky (2016) find that overall employment levels decline between 0.3 and 0.5 percent for every percentage point increase in corporate taxes.…”

Section: Discussioncontrasting

confidence: 88%

“…The QWI data used in this paper were not released until 2014. Other related studies on entrepreneurial activity and policies such as Cullen & Gordon (2007); Mukherjee et al (2017); Rathelot & Sillard (2008); Rohlin et al (2014) are discussed below. 4 Further discussion of these papers and the broader literature can be found in Section 2 5 Bruce & Deskins (2010) explores the share of workers who are sole proprietors and the share of tax returns reporting small business income, finding little effect of tax rates but some evidence for an effect of combined reporting requirements.…”

Section: Introductionmentioning

confidence: 99%

“…Akcigit et al (2017) explore how self-employment responds to fiscal incentives, Aghion et al (2017) find that self-employment is responsive to tax code complexity and Moretti & Wilson (2017) examine the extent to which star scientists migrate in response to state taxation changes. Rohlin et al (2014) explore the role of reciprocal agreements on tax avoidance and new establishment location using data from 2002 and 2005. Mukherjee et al (2017) show that corporate taxes reduce new product development and R&D activity.…”

Section: Introductionmentioning

confidence: 99%

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Entrepreneurship and State Taxation

Curtis

Decker

2018

FEDS

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Entrepreneurship plays a vital role in the economy, yet there exists little well-identified research into the effects of taxes on startup activity. Using recently developed county-level data on startups, we examine the effect of states' corporate, personal and sales tax rates on new firm activity and test for cross-border spillovers in response to these policies. We find that new firm employment is negatively-and disproportionately-affected by corporate tax rates. We find little evidence of an effect of personal and sales taxes on entrepreneurial outcomes. Our results are robust to changes in the tax base and other state-level policies.JEL Codes: L26, D22, H71, H25, J23

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Section: Discussioncontrasting

confidence: 88%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Entrepreneurship and State Taxation

Curtis

Decker

2018

FEDS

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“…We begin with property transactions data for two Pennsylvania and three New York counties along the border. In the vein of recent border discontinuity designs (e.g., Grout et al, 2011;Turner et al, 2014) and specifically those that use state borders (Holmes, 1998;Rohlin et al, 2014), we restrict observations to be within five miles of the border in order to minimize unobserved differences in price determinants and best model the counterfactual for New York residents. Even after these restrictions, there are still substantial hydrological, and geological dynamics (Kulander, 2013;Richardson et al, 2013).…”

Section: Introductionmentioning

confidence: 99%

Valuation of expectations: A hedonic study of shale gas development and New York’s moratorium

Boslett

Guilfoos

Lang

2016

Journal of Environmental Economics and Management

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This paper examines the local impacts of shale gas development (SGD). We use a hedonic framework and exploit a discrete change in expectations about SGD caused by the New York State moratorium on hydraulic fracturing. Our research design combines difference-indifferences and border discontinuity, as well as underlying shale geology, on properties in Pennsylvania and New York. Results suggest that New York properties that were most likely to experience both the financial benefits and environmental consequences of SGD dropped in value 23% as a result of the moratorium, which under certain assumptions indicates a large and positive net valuation of SGD.

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“…Representative studies include Helms (1985), Barro (1990Barro ( , 1991, Mo…di and Stone (1990), Barro and Sala-i-Martin (1995), Mauro (1995Mauro ( , 1998, Fisman and Gatti (2002), Gordon and Lee (2007), Straub (2008Straub ( , 2011, Hassett and Mathur (2008), and Hauner and Kyobe (2010). The literature on how entrepreneurship and investment are impacted by taxation includes Gentry and Hubbard (2005), Petrescu (2009), Djankov et al (2010), Rohlin et al (2010), and Nanda (2011). Public investment and economic growth are discussed by Aschauer (1989), Calderon and Serven (2004), Singhal (2008), and Chakraborty and Dabla-Norris (2011).…”

Section: Introductionmentioning

confidence: 99%

Taxation, Corruption, and Growth

Aghion¹,

Akcigit²,

Cagé³

et al. 2016

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We build an endogenous growth model to analyze the relationships between taxation, corruption, and economic growth. Entrepreneurs lie at the center of the model and face disincentive e¤ects from taxation but acquire positive bene…ts from public infrastructure. Political corruption governs the e¢ ciency with which tax revenues are translated into infrastructure. The model predicts an inverted-U relationship between taxation and growth, with corruption reducing the optimal taxation level. We …nd evidence consistent with these predictions and the entrepreneurial channel using data from the Longitudinal Business Database of the US Census Bureau. The marginal e¤ect of taxation for growth for a state at the 10th or 25th percentile of corruption is signi…cantly positive; on the other hand, the marginal e¤ects of taxation for growth for a state at the 90th percentile of corruption are much lower across the board. We make progress towards causality through Grangerstyle tests and by considering periphery counties where e¤ective tax policy is largely driven by bordering states. Finally, we calibrate our model and …nd that the calibrated taxation rate of 37% is fairly close to the model's estimated welfare maximizing taxation rate of 42%. Reducing corruption provides the largest potential impact for welfare gain through its impact on the uses of tax revenues.

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Tax avoidance and business location in a state border model

Cited by 84 publications

References 32 publications

Entrepreneurship and State Taxation

Entrepreneurship and State Taxation

Valuation of expectations: A hedonic study of shale gas development and New York’s moratorium

Taxation, Corruption, and Growth

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