Vertical externalities in cigarette taxation: Do tax revenues go up in smoke?

Fredriksson, Per G.; Mamun, Khawaja A.

doi:10.1016/j.jue.2007.08.001

Cited by 35 publications

(24 citation statements)

References 30 publications

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“…Model II seeks to adjust for possible strategic interaction in policy making among states (see, e.g., Hunter and Nelson 1992;Nelson 2002;Brueckner 2003 provides a useful survey of the literature on horizontal tax externalities). We follow Fredriksson and Mamun (2008) using the population-weighted tax (denoted NEIGHBOR TAX in Table 2) set by the neighboring states (instrumented by the population-weighted state unemployment rate, the percentage of children and old in the population). Model III includes data from the forty-six states that changed the nominal beer tax during 1980-2001.…”

Section: Resultsmentioning

confidence: 99%

Taxing Under the Influence?

Fredriksson

Gohmann

Mamun

2008

Public Finance Review

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This article examines the effect of state level corruption on state beer taxes in the United States. Our lobby group model predicts that corruption reduces the beer tax, but this effect is conditional on the level of alcohol-related vehicle deaths. Using a panel of state level data from 1982 to 2001, we find that increased corruption is associated with lower state beer tax rates. The magnitude of the effect, however, declines with increases in alcohol-related traffic deaths. Our findings suggest that future empirical work estimating the effect of alcohol taxes on alcohol-related traffic fatalities should treat alcohol taxes as endogenous.

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Section: Resultsmentioning

confidence: 99%

Taxing Under the Influence?

Fredriksson

Gohmann

Mamun

2008

Public Finance Review

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“…First, dealing with sales taxes, some suggest that an increase in the federal tax rate on cigarettes and gasoline leads to an increase in state tax rates on these items Rosen 1998, Devereux et al 2007). However, others suggest that state cigarette tax rates decline when federal cigarettes tax rates increase (Fredriksson and Mamun 2008).…”

Section: Fd and Tax Competitionmentioning

confidence: 99%

Fiscal Decentralization - A Survey of the Empirical Literature

Reingewertz

2014

SSRN Journal

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“…2 In addition to these issues, Fredriksson and Mamun (2008) point out that the assumption of putting the sub-national tax rate on the left-side of the equation is completely arbitrary. It is conceivable that the vertical externality works in the opposite direction that state tax rates cause the federal government to respond.…”

Section: Empirically Estimating Reaction Functionsmentioning

confidence: 99%

Inter-Federation Competition: Sales Tax Externalities with Multiple Federations

Agrawal

2013

SSRN Journal

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; Preliminary: Not for Quotation )>IJH=?J Existing models of tax competition focus on intra-federation competition. This paper analyzes how introducing inter-federation competition aects the strategic nature of tax competition. In the context of a Nash equilibrium, the paper shows that lower levels of government will respond dierently to higher levels of government depending on the local government's position within the federation specically whether the locality is internal or peripheral relative to the federation's borders. Inter-federation competition will also introduce diagonal externalities, which are scal externalities between neighboring jurisdictions, but that occur between dierent levels of government. A diagonal externality will have similar eects as a horizontal externality. The paper uses two unique data sets, a cross-section of all local tax rates in the United States and spatial proximity data, to test how local governments react to horizontal, vertical, and diagonal competitors. The empirical specications allow for vertical and horizontal externalities to have interaction eects and allow for strategic reactions that vary based on proximity to neighboring federations. If interaction eects and distance based eects are omitted from the estimating equation, the vertical strategic reaction will be approximately 30% too large in absolute value. After including these terms, a one percentage point increase in the county tax rate implies that municipal tax rates in the county will be approximately 0.60 percentage points lower. Taxes in neighboring jurisdictions have a large and positive eect. JEL: H25, H71, H73, H77

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Vertical externalities in cigarette taxation: Do tax revenues go up in smoke?

Cited by 35 publications

References 30 publications

Taxing Under the Influence?

Taxing Under the Influence?

Fiscal Decentralization - A Survey of the Empirical Literature

Inter-Federation Competition: Sales Tax Externalities with Multiple Federations

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