Pub Date : 2024-09-17DOI: 10.1177/10911421241280456
Timothy R. Hodge, Timothy M. Komarek, Andrew McAllister
We estimate the degree to which tax inequity generated through property tax assessment practices are capitalized into residential property values. Our analysis not only evaluates whether property buyers understand the tax obligations they are likely to face at the purchase of their property, we also document varying effects based on assessment status. Overassessed, lower-valued property sell for a discount and underassessed, higher-valued property sell for a premium. Specifically, overassessed property sells for an undercapitalized discount of 13%, while underassessed property sells for overcapitalized premiums equal more than 10%. Together, our results imply assessment practices impact wealth both during and after property ownership, potentially widening the wealth gap between high- and low-income homeowners.
{"title":"A Double Negative: Capitalizing on Assessment Regressivity","authors":"Timothy R. Hodge, Timothy M. Komarek, Andrew McAllister","doi":"10.1177/10911421241280456","DOIUrl":"https://doi.org/10.1177/10911421241280456","url":null,"abstract":"We estimate the degree to which tax inequity generated through property tax assessment practices are capitalized into residential property values. Our analysis not only evaluates whether property buyers understand the tax obligations they are likely to face at the purchase of their property, we also document varying effects based on assessment status. Overassessed, lower-valued property sell for a discount and underassessed, higher-valued property sell for a premium. Specifically, overassessed property sells for an undercapitalized discount of 13%, while underassessed property sells for overcapitalized premiums equal more than 10%. Together, our results imply assessment practices impact wealth both during and after property ownership, potentially widening the wealth gap between high- and low-income homeowners.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"42 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142254763","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-14DOI: 10.1177/10911421241275214
Keith Ihlanfeldt, Luke P. Rodgers
We use data from Florida spanning a decade (2010–2019) to empirically revisit the topic of fiscal incidence, the difference between benefits received and taxes paid, as it applies to property taxation. We first estimate demand equations in order to calculate the Lindahl tax share, or price the median voter would be willing to pay for public goods. Our measure of fiscal incidence is the difference between the Lindahl tax share and the actual tax share. With the exception of police and fire expenditures, benefits tend to outweigh costs for those with higher incomes, a pattern we attribute to public goods being valued more by high-income residents who pay a modestly progressive property tax. Controlling for income, Hispanic and black residents have higher levels of fiscal incidence. We explore how policy reforms, including equitable property assessment, affects fiscal incidence.
{"title":"Fiscal Incidence of the Property Tax","authors":"Keith Ihlanfeldt, Luke P. Rodgers","doi":"10.1177/10911421241275214","DOIUrl":"https://doi.org/10.1177/10911421241275214","url":null,"abstract":"We use data from Florida spanning a decade (2010–2019) to empirically revisit the topic of fiscal incidence, the difference between benefits received and taxes paid, as it applies to property taxation. We first estimate demand equations in order to calculate the Lindahl tax share, or price the median voter would be willing to pay for public goods. Our measure of fiscal incidence is the difference between the Lindahl tax share and the actual tax share. With the exception of police and fire expenditures, benefits tend to outweigh costs for those with higher incomes, a pattern we attribute to public goods being valued more by high-income residents who pay a modestly progressive property tax. Controlling for income, Hispanic and black residents have higher levels of fiscal incidence. We explore how policy reforms, including equitable property assessment, affects fiscal incidence.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"52 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142254764","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-03DOI: 10.1177/10911421241278862
Oguzhan Dincer
Government intervention, whether in the role of a regulator or a market participant, presents opportunities for corruption. A burdensome regulatory environment creates more opportunities and incentives for individuals and firms to circumvent these regulations by resorting to different forms of bribery. Glaeser and Saks find that benefits of circumventing the regulations increase as the size of the government increases. The studies collected in this special issue investigate the relationship between various forms of government interventions on corruption.
{"title":"Does Smaller Government Mean Less Corruption?","authors":"Oguzhan Dincer","doi":"10.1177/10911421241278862","DOIUrl":"https://doi.org/10.1177/10911421241278862","url":null,"abstract":"Government intervention, whether in the role of a regulator or a market participant, presents opportunities for corruption. A burdensome regulatory environment creates more opportunities and incentives for individuals and firms to circumvent these regulations by resorting to different forms of bribery. Glaeser and Saks find that benefits of circumventing the regulations increase as the size of the government increases. The studies collected in this special issue investigate the relationship between various forms of government interventions on corruption.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"109 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-09-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142178945","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-14DOI: 10.1177/10911421241273374
Denvil R. Duncan, Justin M. Ross, John L. Mikesell
The Budgetary Enforcement Act of 1990 (BEA90), in effect from 1992 to 2002, is frequently held up as an example of a congressional control that constrained U.S. federal spending. This paper provides a formal test of this conventional wisdom using synthetic control on federal non-defense discretionary expenditures, which is the category of spending BEA90 was considered the most binding. A BEA90-retaining Synthetic United States generated from a lasso regression on a large panel of donors high-income national economic and government finance indicators ultimately reach 2006 at about the same level as the actual United States despite temporarily showing some more restraint immediately upon expiration. We conclude that BEA90 effect on federal non-defense discretionary spending was small, short-lived, statistically likely to have emerged from chance, and more generally did not bend the curve of federal expenditure growth.
{"title":"Can the Federal Budget Process Promote Fiscal Sustainability? Evidence from the Budget Enforcement Act of 1990","authors":"Denvil R. Duncan, Justin M. Ross, John L. Mikesell","doi":"10.1177/10911421241273374","DOIUrl":"https://doi.org/10.1177/10911421241273374","url":null,"abstract":"The Budgetary Enforcement Act of 1990 (BEA90), in effect from 1992 to 2002, is frequently held up as an example of a congressional control that constrained U.S. federal spending. This paper provides a formal test of this conventional wisdom using synthetic control on federal non-defense discretionary expenditures, which is the category of spending BEA90 was considered the most binding. A BEA90-retaining Synthetic United States generated from a lasso regression on a large panel of donors high-income national economic and government finance indicators ultimately reach 2006 at about the same level as the actual United States despite temporarily showing some more restraint immediately upon expiration. We conclude that BEA90 effect on federal non-defense discretionary spending was small, short-lived, statistically likely to have emerged from chance, and more generally did not bend the curve of federal expenditure growth.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"13 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142178946","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-07-23DOI: 10.1177/10911421241261745
Brandon Lehr
This article characterizes optimal social security in economies with agents who exhibit loss aversion. Two forms of loss aversion are explored. In the first, workers have a fixed retirement age and are loss averse over private savings. This motivates a more generous social security program. In the second, workers do no private savings but can choose their retirement age, exhibiting loss aversion over the foregone leisure time from delayed retirement. Social security benefits consequently rise steeper with retirement age and an earlier normal retirement age is optimal. In both cases, optimal policy is highly sensitive to the introduction of loss averse preferences.
{"title":"Optimal Social Security with Loss Aversion","authors":"Brandon Lehr","doi":"10.1177/10911421241261745","DOIUrl":"https://doi.org/10.1177/10911421241261745","url":null,"abstract":"This article characterizes optimal social security in economies with agents who exhibit loss aversion. Two forms of loss aversion are explored. In the first, workers have a fixed retirement age and are loss averse over private savings. This motivates a more generous social security program. In the second, workers do no private savings but can choose their retirement age, exhibiting loss aversion over the foregone leisure time from delayed retirement. Social security benefits consequently rise steeper with retirement age and an earlier normal retirement age is optimal. In both cases, optimal policy is highly sensitive to the introduction of loss averse preferences.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"48 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-07-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141773020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-05-29DOI: 10.1177/10911421241257596
Tarkan Cavusoglu, Ozgur Teoman
Corruption has been one of the challenging topics in public economics for years, prompting extensive discussions from various perspectives. In this study, we investigate the causal relationship between government size and corruption in Turkey, where the anticorruption performance has been getting worse over time until recently. By utilizing a long-span news-based corruption index spanning approximately three-quarters of a century, we conclude that government size serves as the long-term driving force behind corruption in Turkey from 1950 to 2019. This conclusion is robustly reached through a battery of dynamic time series analyses.
{"title":"Government Size and Corruption in Turkey","authors":"Tarkan Cavusoglu, Ozgur Teoman","doi":"10.1177/10911421241257596","DOIUrl":"https://doi.org/10.1177/10911421241257596","url":null,"abstract":"Corruption has been one of the challenging topics in public economics for years, prompting extensive discussions from various perspectives. In this study, we investigate the causal relationship between government size and corruption in Turkey, where the anticorruption performance has been getting worse over time until recently. By utilizing a long-span news-based corruption index spanning approximately three-quarters of a century, we conclude that government size serves as the long-term driving force behind corruption in Turkey from 1950 to 2019. This conclusion is robustly reached through a battery of dynamic time series analyses.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"21 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-05-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141194241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-05-07DOI: 10.1177/10911421241250088
Tatyana Guzman, Benjamin Y. Clark
George Floyd's killing in Minneapolis spotlighted the role of police-involved fatalities that cause immeasurable harm to victims’ families and communities, weaken public trust in government and may lead to civil unrest. Police-involved fatalities place a financial burden on the cities, given the size of awards to victims’ families and the cost of implementing consent decrees. By quantifying the impact of fatal encounters on city credit rating, this study offers evidence for policymakers to make informed decisions regarding policing practices in their cities. Credit ratings incorporate third-party perceptions of local governments’ fiscal, economic, demographic, and political performance. The credit rating agency Moody's has noted “the potential financial impact of ongoing litigation costs” surrounding police-involved fatalities as a driver of downgrading ratings. Our article examines the impact of fatal encounters on the creditworthiness of the 150 largest US cities from 2000 to 2019. We observe a consistent negative correlation between police-involved fatalities and credit ratings among all the model estimates. These correlations remain statistically significant over time. We also estimate that the larger the share of non-white victims of police violence, the lower the cities’ credit ratings are.
{"title":"Estimating the Negative Credit Impacts of Police-involved Fatalities","authors":"Tatyana Guzman, Benjamin Y. Clark","doi":"10.1177/10911421241250088","DOIUrl":"https://doi.org/10.1177/10911421241250088","url":null,"abstract":"George Floyd's killing in Minneapolis spotlighted the role of police-involved fatalities that cause immeasurable harm to victims’ families and communities, weaken public trust in government and may lead to civil unrest. Police-involved fatalities place a financial burden on the cities, given the size of awards to victims’ families and the cost of implementing consent decrees. By quantifying the impact of fatal encounters on city credit rating, this study offers evidence for policymakers to make informed decisions regarding policing practices in their cities. Credit ratings incorporate third-party perceptions of local governments’ fiscal, economic, demographic, and political performance. The credit rating agency Moody's has noted “the potential financial impact of ongoing litigation costs” surrounding police-involved fatalities as a driver of downgrading ratings. Our article examines the impact of fatal encounters on the creditworthiness of the 150 largest US cities from 2000 to 2019. We observe a consistent negative correlation between police-involved fatalities and credit ratings among all the model estimates. These correlations remain statistically significant over time. We also estimate that the larger the share of non-white victims of police violence, the lower the cities’ credit ratings are.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"44 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140931885","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-29DOI: 10.1177/10911421241248719
Jamie Bologna Pavlik, Desiree Desierto
The US Foreign Corrupt Practices Act (FCPA) prohibits the payment of bribes to foreign public officials. We uncover an unintended consequence—the shadow economies of the countries of these officials increase after FCPA enforcement. Our hypothesis is that corrupt officials may be switching to taking bribes from illegal markets. We find that one case of FCPA enforcement alone increases the shadow economy by as much as 0.27 percentage points (pp), tree loss—an indicator of illegal logging—by 0.027 pp, and trade misinvoicing by 0.5 pp. Our results suggest the need to harmonize anti-corruption policies across all sectors—legal and illegal.
{"title":"Bribe-Switching","authors":"Jamie Bologna Pavlik, Desiree Desierto","doi":"10.1177/10911421241248719","DOIUrl":"https://doi.org/10.1177/10911421241248719","url":null,"abstract":"The US Foreign Corrupt Practices Act (FCPA) prohibits the payment of bribes to foreign public officials. We uncover an unintended consequence—the shadow economies of the countries of these officials increase after FCPA enforcement. Our hypothesis is that corrupt officials may be switching to taking bribes from illegal markets. We find that one case of FCPA enforcement alone increases the shadow economy by as much as 0.27 percentage points (pp), tree loss—an indicator of illegal logging—by 0.027 pp, and trade misinvoicing by 0.5 pp. Our results suggest the need to harmonize anti-corruption policies across all sectors—legal and illegal.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"157 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-04-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140841254","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-29DOI: 10.1177/10911421241248506
Ege Can, Mark W. Nichols
This paper tests for potential cross-border substitution in casino gambling between Illinois and Missouri due to the launch of sports betting in Illinois. Using casino-level gambling revenue and admissions data, difference-in-differences, event study analysis, and regression discontinuity design, our findings suggest that the launch of sports betting increased casino revenues and admissions in the Illinois casinos and decreased revenue and admissions in Missouri casinos close to the border of Illinois and Missouri. Thus, Missouri not only lost potential sports betting tax revenue but also tax revenue from casino gambling revenue and admissions resulting from cross-border substitution between Missouri and Illinois after the launch of sports betting. The size of the lost casino and foregone sports betting tax revenues suggests Missouri and other states in similar circumstances are likely to experience continued fiscal pressure to legalize sports betting despite possible moral objections or an intent to minimize social costs through prohibition.
{"title":"The Effects of Sports Betting on Cross-Border Substitution in Casino Gambling","authors":"Ege Can, Mark W. Nichols","doi":"10.1177/10911421241248506","DOIUrl":"https://doi.org/10.1177/10911421241248506","url":null,"abstract":"This paper tests for potential cross-border substitution in casino gambling between Illinois and Missouri due to the launch of sports betting in Illinois. Using casino-level gambling revenue and admissions data, difference-in-differences, event study analysis, and regression discontinuity design, our findings suggest that the launch of sports betting increased casino revenues and admissions in the Illinois casinos and decreased revenue and admissions in Missouri casinos close to the border of Illinois and Missouri. Thus, Missouri not only lost potential sports betting tax revenue but also tax revenue from casino gambling revenue and admissions resulting from cross-border substitution between Missouri and Illinois after the launch of sports betting. The size of the lost casino and foregone sports betting tax revenues suggests Missouri and other states in similar circumstances are likely to experience continued fiscal pressure to legalize sports betting despite possible moral objections or an intent to minimize social costs through prohibition.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"23 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-04-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140841049","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-04-17DOI: 10.1177/10911421241240546
Yusun Kim, Judith Liu
How do public health crises affect public health spending at different levels of government in a federal system? This study shows that small outbreaks of communicable diseases can have sizeable fiscal impact on federal and state governments through public health insurance and intergovernmental grants. We examine the case of the Zika virus outbreak in the United States using nationwide county-level data from 2010 to 2019. Our event study and difference-in-differences estimates show that public medical assistance transfers immediately increased in areas with a higher likelihood of local transmissions but gradually decreased in counties with a larger share of reproductive-age women or Hispanic population. Medicare reimbursement to the elderly increased temporarily, coinciding with the federal decision to cover diagnostic tests under Medicare. The Zika outbreak also increased county government spending on health and welfare in Florida and Texas, much of which was financed by intergovernmental transfers.
{"title":"The Fiscal Costs of Public Health Crisis: Lessons from Zika in the United States","authors":"Yusun Kim, Judith Liu","doi":"10.1177/10911421241240546","DOIUrl":"https://doi.org/10.1177/10911421241240546","url":null,"abstract":"How do public health crises affect public health spending at different levels of government in a federal system? This study shows that small outbreaks of communicable diseases can have sizeable fiscal impact on federal and state governments through public health insurance and intergovernmental grants. We examine the case of the Zika virus outbreak in the United States using nationwide county-level data from 2010 to 2019. Our event study and difference-in-differences estimates show that public medical assistance transfers immediately increased in areas with a higher likelihood of local transmissions but gradually decreased in counties with a larger share of reproductive-age women or Hispanic population. Medicare reimbursement to the elderly increased temporarily, coinciding with the federal decision to cover diagnostic tests under Medicare. The Zika outbreak also increased county government spending on health and welfare in Florida and Texas, much of which was financed by intergovernmental transfers.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"14 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2024-04-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140612710","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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