The Robust Relationship between Taxes and U.S. State Income Growth

Reed, W. Robert

doi:10.17310/ntj.2008.1.03

Cited by 95 publications

(143 citation statements)

References 39 publications

Supporting

Mentioning

131

Contrasting

Unclassified

Order By: Relevance

“…There are many studies that have examined the effect of taxes on economic growth (Helms, 1985;Myles, 2000;Folster and Henrekson, 2001;Lee and Gordon, 2005;Tosun and Abizadeh, 2005;Bania et al 2007;Furceri and Karras, 2007;Reed, 2008;Romer and Romer, 2010;Gemmel et al 2011;Arnold et al 2011;Barro and Redlick, 2011;Ferede and Dahlby, 2012;Mertens and Ravn, 2013;Saqib et al 2014;Gale et al 2015;Ojong et al 2016). Engen and Skinner (1996) found that 2.5% point increase in tax to GDP ratio decreases GDP growth by 0.2-0.3%.…”

Section: Literature Reviewmentioning

confidence: 99%

Estimating the Impact of Taxes on the Economic Growth in the United States

2017

View full text Add to dashboard Cite

Abstract:In a research paper, the authors provide an empirical approach to taxes and economic growth in the United States in the period 1996-2016. The basic goal is to explore how taxes affect economic growth. The subject of the research is measuring the effects of tax revenue growth and tax form as a personal income tax, corporate income tax and social security contributions on gross domestic product as a proxy for economic growth. Methodology framework includes several tests to clear the potential problem of heteroscedasticity, autocorrelation, multicollinearity and specification of the model. Based on diagnostic tests, a regression model is adequately created where fundamental econometric procedures are applied. Correlation matrix reflects a strong and positive relationship between tax revenue growth and corporate income tax on the one side and gross domestic product growth, on the another side. Also, personal income tax and social security contributions are weakly related to gross domestic product growth. The model shows a significant effect of tax revenue growth and social security contributions, while personal income tax and corporate income tax do not have a significant impact on gross domestic product growth. Interestingly, personal income tax as the main tax form in the tax structure of the United States has no significant impact on economic growth compared to social security contributions which percentage share is lesser.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Estimating the Impact of Taxes on the Economic Growth in the United States

2017

View full text Add to dashboard Cite

show abstract

“…Tax burden, particularly personal income tax, generally reduces income growth at the state level, but effects fluctuate by time period, with little impact over the long term, and high income tax rates have inconsistent effects on economic growth (Gale, Krupkin, and Rueben 2015;Ojede and Yamarik 2012;Reed 2008;Reed and Rogers 2004;Yamarik 2000).…”

Section: Economic Growthmentioning

confidence: 99%

Integrating California's Climate Change and Fiscal Goals: The known, the Unknown, and the Possible

Chapple¹

2016

CJPP

View full text Add to dashboard Cite

“…Bania et al (2007) use total state revenue which includes state and local taxes, fees and intergovernmental revenue as their only tax-related variable. Reed (2008) likewise uses a tax measure comprising all state and local tax revenue which may include transfers from the central government. We choose to exclude both studies from the final tables because their 'tax' variables might include a significant share of intergovernmental transfers.…”

Section: Measures Of the Tax Burden And The Tax Changes In Panel Studiesmentioning

confidence: 99%

“…They argue that at the level of the U.S. states, deficits are usually negligibly small compared to overall revenues and expenditures. Given that this may have held prior to the recent economic crisis, we do not exclude Reed (2008) on the basis that they do not consider the GBC.…”

mentioning

confidence: 99%

What Does Ex-Post Evidence Tell Us About the Output Effects of Future Tax Reforms?

Kneller

Misch

2011

SSRN Journal

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp11029.pdf Non-Technical SummaryAs a result of the global economic recession there is renewed interest in the effects of taxation on economic performance: many countries attempted to use tax cuts as a means to stimulate aggregate demand and now require future tax increases to reduce large public sector deficits partly in response to the crisis. Correctly forecasting the short-run output effects and the long-run growth impact of such tax changes is central from a policy perspective. In practice however, this task is complex: tax changes affect output through a number of transmission channels, and they impact both on demand and supply conditions.There is a large empirical literature estimating the effects of tax changes ex-post that is a potentially useful source of information for policy makers. These studies can be broadly grouped according to whether they present structural estimates, which mostly refer to the medium-and long-run relationships and employ panel methods, or whether they are based on time series for particular countries, generally refer to shorter run effects, make few structural assumptions and are primarily based on vector auto regressions. Both strands of the literature and the short-and long-run effects of tax changes are usually considered separately, even though from a policy perspective and to understand potential trade-offs, this division is not justified. However, irrespective of this distinction a general conclusion would be that, while most studies agree that changes in at least some types of taxation are associated with changes in growth rates or output levels in the short and long run, studies neither agree on the magnitude nor on the direction of the effects.The objective of this paper is to summarize and to evaluate existing ex-post evidence on the shortand long-run output effects (i.e. short-run tax multipliers and long-run growth effects) effects of changes in taxation from the point of view of a policy maker in an OECD country who wishes to predict the output effects of a tax reform ex-ante. For this reason we propose a set of criteria against which we evaluate existing evidence that will ensure distinctness from a more traditional literature review. In particular, a given parameter estimate is useful for predicting the effects of tax reforms according to whether 1) it is relevant, 2) it can be replicated and 3) it is robust and reliable. Whil...

show abstract

The Robust Relationship between Taxes and U.S. State Income Growth

Abstract: -

Cited by 95 publications

References 39 publications

Estimating the Impact of Taxes on the Economic Growth in the United States

Estimating the Impact of Taxes on the Economic Growth in the United States

Integrating California's Climate Change and Fiscal Goals: The known, the Unknown, and the Possible

What Does Ex-Post Evidence Tell Us About the Output Effects of Future Tax Reforms?

Contact Info

Product

Resources

About