Many states in recent decades enacted laws that limit the collection of property taxes. This study examines the impacts of New York State’s 2011 tax cap on education revenues and student achievement. We use an instrumental variables approach with 663 school districts from 2006 to 2016. We find that each $1,000 loss in per-pupil revenues from the tax cap leads to drops in student test performance of 0.04 standard deviation, driven by reductions in instructional expenditures, teacher hiring, and support personnel. Wealthier districts incurred more costs from the tax cap due to their higher reliance on property taxes.
{"title":"The Distributional Effects of Property Tax Constraints on School Districts","authors":"Lucy C. Sorensen, Youngsun Kim, Moon-Yun Hwang","doi":"10.1086/716231","DOIUrl":"https://doi.org/10.1086/716231","url":null,"abstract":"Many states in recent decades enacted laws that limit the collection of property taxes. This study examines the impacts of New York State’s 2011 tax cap on education revenues and student achievement. We use an instrumental variables approach with 663 school districts from 2006 to 2016. We find that each $1,000 loss in per-pupil revenues from the tax cap leads to drops in student test performance of 0.04 standard deviation, driven by reductions in instructional expenditures, teacher hiring, and support personnel. Wealthier districts incurred more costs from the tax cap due to their higher reliance on property taxes.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"621 - 654"},"PeriodicalIF":1.7,"publicationDate":"2021-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47457508","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Democratic Federalism: The Economics, Politics, and Law of Federal Governance edited by Robert P. Inman and Daniel L. Rubinfeld (Princeton University Press, 2020, Princeton, NJ, 439 pages)","authors":"T. Mcguire","doi":"10.1086/713513","DOIUrl":"https://doi.org/10.1086/713513","url":null,"abstract":"","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"1 1","pages":"000-000"},"PeriodicalIF":1.7,"publicationDate":"2021-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/713513","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42405871","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This issue marks a major transition at the National Tax Journal. We are pleased to announce that, startingwith theMarch 2021 issue, theUniversity of Chicago Press is now the publisher of the NTJ! Since the creation of the NTJ in 1948, the National TaxAssociation has self-published the journal. Over the years, we have hired amanaging editor to facilitate the publication process, including oversight of printing and distribution. This publication model served us well when publishing a journal was mainly about delivering print copies to our members and institutional subscribers. As the world moved on from the printing press to the digital age, journal publication changed dramatically. By moving to the University of Chicago Press (UCP), we will enhance our digital presence and leverage the economies of scale that UCP has by being part of its portfolio of journals. We are excited about our new partnership. We believe that it will greatly boost the level of services that we deliver our readers. A transition like this happens only through hardwork of peoplewith a vision for the future. The NTA Board of Directors and the Publication Committee were essential in moving us forward. In particular, Peter Merrill, Jim Alm, Jay Mackie, Bill Gale, and Tara Sheehan were instrumental in soliciting and evaluating proposals from potential publishers. The entire Board of Directors was supportive of the change and helped think through the myriad of issues. We would not be taking this big leap without their efforts. Unfortunately, the transition toUCPmeans partingwayswith Sally Sztrecska, our current managing editor. Sally became managing editor in 2017. She has done fantastic work running the logistical end of the NTJ and helping keep the editors on track. She has been proactive at anticipating the needs of the journal and the editors at many turns, enhancing the final NTJ issues in unseen ways. She has shepherded articles through the editorial process with a high level of organization and kindness. We are extremely grateful for her efforts. In another piece of news, Naomi Feldman will step down as Forum Editor. In her time as Forum Editor since 2019, Naomi reenergized our forum section with diverse
{"title":"Editors’ Note: March 2021","authors":"Stacy Dickert‐Conlin, B. Gentry","doi":"10.1086/713734","DOIUrl":"https://doi.org/10.1086/713734","url":null,"abstract":"This issue marks a major transition at the National Tax Journal. We are pleased to announce that, startingwith theMarch 2021 issue, theUniversity of Chicago Press is now the publisher of the NTJ! Since the creation of the NTJ in 1948, the National TaxAssociation has self-published the journal. Over the years, we have hired amanaging editor to facilitate the publication process, including oversight of printing and distribution. This publication model served us well when publishing a journal was mainly about delivering print copies to our members and institutional subscribers. As the world moved on from the printing press to the digital age, journal publication changed dramatically. By moving to the University of Chicago Press (UCP), we will enhance our digital presence and leverage the economies of scale that UCP has by being part of its portfolio of journals. We are excited about our new partnership. We believe that it will greatly boost the level of services that we deliver our readers. A transition like this happens only through hardwork of peoplewith a vision for the future. The NTA Board of Directors and the Publication Committee were essential in moving us forward. In particular, Peter Merrill, Jim Alm, Jay Mackie, Bill Gale, and Tara Sheehan were instrumental in soliciting and evaluating proposals from potential publishers. The entire Board of Directors was supportive of the change and helped think through the myriad of issues. We would not be taking this big leap without their efforts. Unfortunately, the transition toUCPmeans partingwayswith Sally Sztrecska, our current managing editor. Sally became managing editor in 2017. She has done fantastic work running the logistical end of the NTJ and helping keep the editors on track. She has been proactive at anticipating the needs of the journal and the editors at many turns, enhancing the final NTJ issues in unseen ways. She has shepherded articles through the editorial process with a high level of organization and kindness. We are extremely grateful for her efforts. In another piece of news, Naomi Feldman will step down as Forum Editor. In her time as Forum Editor since 2019, Naomi reenergized our forum section with diverse","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"1 - 2"},"PeriodicalIF":1.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/713734","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48710923","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Retail sales taxes, critical for American government finance, embody a “narrow base, high rate” Great Depression legacy. Legislation can correct this, but technologies and new economy economic structures challenge direct state control. Structural changes focusing the tax on consumption expenditure and away from business purchases can correct the legacy problem and align the tax with new economy issues emerging from remote vendors, the sharing economy, and digital products. The future of the tax as a productive, efficient, and equitable revenue source depends on resolving structural, behavioral, and administrative threats that challenge its robustness for the old and new economic paradigm.
{"title":"How Does the Depression-Designed Retail Sales Tax Cope with the New Economy? A Tax for the New and A Tax for the Old","authors":"J. Mikesell, Daniel R. Mullins, Sharon N. Kioko","doi":"10.1086/713001","DOIUrl":"https://doi.org/10.1086/713001","url":null,"abstract":"Retail sales taxes, critical for American government finance, embody a “narrow base, high rate” Great Depression legacy. Legislation can correct this, but technologies and new economy economic structures challenge direct state control. Structural changes focusing the tax on consumption expenditure and away from business purchases can correct the legacy problem and align the tax with new economy issues emerging from remote vendors, the sharing economy, and digital products. The future of the tax as a productive, efficient, and equitable revenue source depends on resolving structural, behavioral, and administrative threats that challenge its robustness for the old and new economic paradigm.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"187 - 220"},"PeriodicalIF":1.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/713001","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44532200","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyze the effects of the major US tax reform of 2017 on European firms. Although foreign firms that are active in the respective country should be directly affected, other foreign firms could also be indirectly affected through competition. With an event study design, we analyze stock market returns in Europe around key dates in the legislative process leading to the Tax Cuts and Jobs Act. We find positive market returns for the European firms that are active in the United States. Moreover, our results suggest an indirect effect through competition. European firms that face strong competition from US firms in their domestic markets exhibit significantly lower returns.
{"title":"Cross-Border Effects of A Major Tax Reform — Evidence from the European Stock Market","authors":"Michael Overesch, Max Pflitsch","doi":"10.1086/712914","DOIUrl":"https://doi.org/10.1086/712914","url":null,"abstract":"We analyze the effects of the major US tax reform of 2017 on European firms. Although foreign firms that are active in the respective country should be directly affected, other foreign firms could also be indirectly affected through competition. With an event study design, we analyze stock market returns in Europe around key dates in the legislative process leading to the Tax Cuts and Jobs Act. We find positive market returns for the European firms that are active in the United States. Moreover, our results suggest an indirect effect through competition. European firms that face strong competition from US firms in their domestic markets exhibit significantly lower returns.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"75 - 106"},"PeriodicalIF":1.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/712914","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48424960","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The 2018 US Supreme Court decision in South Dakota v. Wayfair is arguably the court’s most consequential state tax decision in a generation, perhaps longer. The Wayfair decision overturned the Supreme Court’s 1992 decision in Quill (itself a continuation of the Supreme Court’s ruling in National Bellas Hess a quarter century earlier), which had prohibited states from imposing a use tax collection obligation on vendors without a physical presence in the taxing state. Although the decision marks a welcome milestone in the development of the retail sales tax as an effective destination-based consumption tax, the court’s decision also invigorates the constitutional principle of state autonomy in fiscal matters, leaving the imposition of any constraints on state taxing power to Congress. However, unlike in earlier eras when Congress responded to court decisions with new statutory limits, today’s Congress faces historic polarization and legislative gridlock, reducing the likelihood of federal reforms designed to promote uniformity and simplification.
{"title":"Wayfair in Constitutional Perspective: Who Sets the Ground Rules of US Fiscal Federalism?","authors":"K. Stark","doi":"10.1086/713000","DOIUrl":"https://doi.org/10.1086/713000","url":null,"abstract":"The 2018 US Supreme Court decision in South Dakota v. Wayfair is arguably the court’s most consequential state tax decision in a generation, perhaps longer. The Wayfair decision overturned the Supreme Court’s 1992 decision in Quill (itself a continuation of the Supreme Court’s ruling in National Bellas Hess a quarter century earlier), which had prohibited states from imposing a use tax collection obligation on vendors without a physical presence in the taxing state. Although the decision marks a welcome milestone in the development of the retail sales tax as an effective destination-based consumption tax, the court’s decision also invigorates the constitutional principle of state autonomy in fiscal matters, leaving the imposition of any constraints on state taxing power to Congress. However, unlike in earlier eras when Congress responded to court decisions with new statutory limits, today’s Congress faces historic polarization and legislative gridlock, reducing the likelihood of federal reforms designed to promote uniformity and simplification.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"221 - 256"},"PeriodicalIF":1.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/713000","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46636887","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Taxing consumption in the digital economy poses unique challenges for fiscal authorities. Recent institutional reforms, such as states changing remittance rules for the sales and use tax following the Supreme Court decision in South Dakota v. Wayfair, were enacted to increase tax revenue collections and create a more neutral tax system. Although these reforms induced more remote vendors to remit taxes on a destination basis, the revenue gains were modest, consistent with most large online vendors remitting taxes prior to the reforms. Instead, following the recent large shock to online shopping from the COVID-19 pandemic, the shift to destination-based taxation has redistributed revenues between large and small local jurisdictions. Increased online shopping raises revenue growth in small jurisdictions while contracting revenues in large jurisdictions. But Wayfair is not the end of the story: technological changes that induce new consumption patterns promise new challenges for fiscal authorities. Critical challenges for the next decades include limiting administrative and compliance costs of enforcing taxes in a digital world, determining filing thresholds, dealing with online marketplaces and facilitators, and taxing the consumption of digital services from two-sided platforms. With respect to digital services, we discuss whether consumption taxes should be imposed on both monetized platforms and nonmonetized platforms, such as social media, and the mechanisms for doing so.
{"title":"Taxing Goods and Services in a Digital Era","authors":"David R. Agrawal, W. Fox","doi":"10.1086/712913","DOIUrl":"https://doi.org/10.1086/712913","url":null,"abstract":"Taxing consumption in the digital economy poses unique challenges for fiscal authorities. Recent institutional reforms, such as states changing remittance rules for the sales and use tax following the Supreme Court decision in South Dakota v. Wayfair, were enacted to increase tax revenue collections and create a more neutral tax system. Although these reforms induced more remote vendors to remit taxes on a destination basis, the revenue gains were modest, consistent with most large online vendors remitting taxes prior to the reforms. Instead, following the recent large shock to online shopping from the COVID-19 pandemic, the shift to destination-based taxation has redistributed revenues between large and small local jurisdictions. Increased online shopping raises revenue growth in small jurisdictions while contracting revenues in large jurisdictions. But Wayfair is not the end of the story: technological changes that induce new consumption patterns promise new challenges for fiscal authorities. Critical challenges for the next decades include limiting administrative and compliance costs of enforcing taxes in a digital world, determining filing thresholds, dealing with online marketplaces and facilitators, and taxing the consumption of digital services from two-sided platforms. With respect to digital services, we discuss whether consumption taxes should be imposed on both monetized platforms and nonmonetized platforms, such as social media, and the mechanisms for doing so.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"257 - 301"},"PeriodicalIF":1.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/712913","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49616589","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cannabis advocates argue that legalization will increase tax revenues. However, if legal substances are substitutes, cannabis revenues may cannibalize other taxes. We document substitution between legal cannabis products and alcohol and tobacco products using detailed administrative and scanner data from Washington State. We estimate a flexible demand system for legal substances and find legalizing cannabis leads to a 15 percent decrease in alcohol, mainly by liquor and wine, and 5 percent decrease in cigarette demand. Approximately 40 percent of Washington’s 2015 cannabis revenue was cannibalized from preexisting sources. We find that Washington’s current substance taxes, even after accounting for substitution, are on the upward-sloping side of the Laffer curve.
{"title":"The Effect of Cannabis Legalization on Substance Demand and Tax Revenues","authors":"Keaton S. Miller, Boyoung Seo","doi":"10.1086/712915","DOIUrl":"https://doi.org/10.1086/712915","url":null,"abstract":"Cannabis advocates argue that legalization will increase tax revenues. However, if legal substances are substitutes, cannabis revenues may cannibalize other taxes. We document substitution between legal cannabis products and alcohol and tobacco products using detailed administrative and scanner data from Washington State. We estimate a flexible demand system for legal substances and find legalizing cannabis leads to a 15 percent decrease in alcohol, mainly by liquor and wine, and 5 percent decrease in cigarette demand. Approximately 40 percent of Washington’s 2015 cannabis revenue was cannibalized from preexisting sources. We find that Washington’s current substance taxes, even after accounting for substitution, are on the upward-sloping side of the Laffer curve.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"107 - 145"},"PeriodicalIF":1.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/712915","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45250163","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we estimate the long-term causal effect of population losses on local government revenue, expenditure, and debt by exploiting a quasi-exogenous change that reduced the number of US military personnel by about 40 percent between the late 1980s and 2000. Aggregating across governmental units within commuting zones, we find that real per capita total revenues and expenditures remained unchanged for remaining citizens. At the same time, however, we note several important compositional effects. First, local governments appear to have offset reductions in state intergovernmental aid by increasing property tax revenues. Second, they significantly shifted the composition of expenditures by making disproportionately large cuts in capital spending, including cuts in K–12 education, to maintain levels for current operations. Third, localities increased their long-term nonguaranteed debt to finance investments not covered by general capital outlays. Taken together, these actions run the risk of hindering a region’s relative competitiveness in the long term.
{"title":"Local Fiscal Adjustments From Depopulation: Evidence From The Post–Cold War Defense Contraction","authors":"Timothy M. Komarek,Gary A. Wagner","doi":"10.1086/712917","DOIUrl":"https://doi.org/10.1086/712917","url":null,"abstract":"In this paper, we estimate the long-term causal effect of population losses on local government revenue, expenditure, and debt by exploiting a quasi-exogenous change that reduced the number of US military personnel by about 40 percent between the late 1980s and 2000. Aggregating across governmental units within commuting zones, we find that real per capita total revenues and expenditures remained unchanged for remaining citizens. At the same time, however, we note several important compositional effects. First, local governments appear to have offset reductions in state intergovernmental aid by increasing property tax revenues. Second, they significantly shifted the composition of expenditures by making disproportionately large cuts in capital spending, including cuts in K–12 education, to maintain levels for current operations. Third, localities increased their long-term nonguaranteed debt to finance investments not covered by general capital outlays. Taken together, these actions run the risk of hindering a region’s relative competitiveness in the long term.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"20 1-2","pages":"9-43"},"PeriodicalIF":1.7,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138512338","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
U.S. federal taxes have become more progressive since 1979, largely due to more generous tax credits for lower income individuals. Though top statutory rates fell substantially, this affected few taxpayers and was offset by decreased use of tax shelters, such that high-income average tax rates have been relatively stable. Redistribution, which accounts for both taxes and transfers, has also increased according to Congressional Budget Office data. Measures of progressivity and redistribution, however, capture different aspects of policy. Over the longer run, earlier decreases suggest a U-shaped tax progressivity curve since WWII, with the minimum occurring in 1986.
{"title":"U.S. TAX PROGRESSIVITY AND REDISTRIBUTION","authors":"David Splinter","doi":"10.17310/ntj.2020.4.04","DOIUrl":"https://doi.org/10.17310/ntj.2020.4.04","url":null,"abstract":"U.S. federal taxes have become more progressive since 1979, largely due to more generous tax credits for lower income individuals. Though top statutory rates fell substantially, this affected few taxpayers and was offset by decreased use of tax shelters, such that high-income average tax rates have been relatively stable. Redistribution, which accounts for both taxes and transfers, has also increased according to Congressional Budget Office data. Measures of progressivity and redistribution, however, capture different aspects of policy. Over the longer run, earlier decreases suggest a U-shaped tax progressivity curve since WWII, with the minimum occurring in 1986.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"73 1","pages":"1005 - 1024"},"PeriodicalIF":1.7,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45620795","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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