Pub Date : 2023-08-30DOI: 10.1177/10911421231190964
Eric A. Hanushek, Matthew Joyce-Wirtz
State courts regularly enter in school finance decision making. School finance court cases have proceeded one or more times in all but two states. Plaintiffs ask the courts to rule that the existing funding formula is unconstitutional under state constitutions, and the defendants call for continuation of the existing finance formula. By compiling and analyzing the universe of such cases, we can accurately describe the nature of the cases, the decisions made, and the long run impact on overall financing of schools. Defendants win a slight majority of decisions with, surprisingly, their victories coming most frequently in low spending states and in low achieving states. And, while plaintiff victories on average yield an immediate increase in funding, they have no influence on long run growth in school spending.
{"title":"Incidence and Outcomes of School Finance Litigation: 1968–2021","authors":"Eric A. Hanushek, Matthew Joyce-Wirtz","doi":"10.1177/10911421231190964","DOIUrl":"https://doi.org/10.1177/10911421231190964","url":null,"abstract":"State courts regularly enter in school finance decision making. School finance court cases have proceeded one or more times in all but two states. Plaintiffs ask the courts to rule that the existing funding formula is unconstitutional under state constitutions, and the defendants call for continuation of the existing finance formula. By compiling and analyzing the universe of such cases, we can accurately describe the nature of the cases, the decisions made, and the long run impact on overall financing of schools. Defendants win a slight majority of decisions with, surprisingly, their victories coming most frequently in low spending states and in low achieving states. And, while plaintiff victories on average yield an immediate increase in funding, they have no influence on long run growth in school spending.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136119808","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 : 2023-08-09DOI: 10.1177/10911421231183395
William B. Hankins
The literature on excise tax rates has provided mixed evidence concerning how partisan ideology affects tax changes. Using a regression discontinuity design and a panel of U.S. states over the period 1970–2019 I find no significant difference in cigarette, distilled spirits, or gasoline excise tax rates between Democratic governors and Republican governors elected by a similar margin. This result is found regardless of whether the governor can run for an additional term or faces a binding term limit. These results are robust to an analysis of the post-southern realignment period, when controlling for southern Democrats, or when analyzing open elections without an incumbent in the running. An implication of this result is that interstate tax competition and the mobility of the tax base dwarfs any ideological differences with respect to excise tax policy.
{"title":"Partisan Politics and Excise Tax Rates in the United States","authors":"William B. Hankins","doi":"10.1177/10911421231183395","DOIUrl":"https://doi.org/10.1177/10911421231183395","url":null,"abstract":"The literature on excise tax rates has provided mixed evidence concerning how partisan ideology affects tax changes. Using a regression discontinuity design and a panel of U.S. states over the period 1970–2019 I find no significant difference in cigarette, distilled spirits, or gasoline excise tax rates between Democratic governors and Republican governors elected by a similar margin. This result is found regardless of whether the governor can run for an additional term or faces a binding term limit. These results are robust to an analysis of the post-southern realignment period, when controlling for southern Democrats, or when analyzing open elections without an incumbent in the running. An implication of this result is that interstate tax competition and the mobility of the tax base dwarfs any ideological differences with respect to excise tax policy.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"1 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2023-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41859893","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 : 2023-07-10DOI: 10.1177/10911421231183755
Oskar Nupia
The idea that paying taxes makes politicians more accountable to citizens has long drawn the attention of scholars. This article contributes to the understanding of this relationship from a novel perspective: that it is elections rather than negotiations between politicians and elites—as most of the previous literature has assumed—that serve as the primary mechanism by which citizens discipline politicians. I build a voting agency model that considers two effects of income taxes on voters’ decisions: how changes in voters’ disposable income affect their political demands and how increments in tax revenues affect voters’ beliefs about the ability of institutions to affect incumbents’ decisions. I find that increments in taxes always strengthen voters’ political demands. Nevertheless, it would not necessarily prove useful for disciplining incumbents—in terms of a higher expected provision of public goods and lower captured rents. Gains in political accountability, in turn, positively affect the equilibrium income tax rate.
{"title":"Income Taxes and Political Accountability","authors":"Oskar Nupia","doi":"10.1177/10911421231183755","DOIUrl":"https://doi.org/10.1177/10911421231183755","url":null,"abstract":"The idea that paying taxes makes politicians more accountable to citizens has long drawn the attention of scholars. This article contributes to the understanding of this relationship from a novel perspective: that it is elections rather than negotiations between politicians and elites—as most of the previous literature has assumed—that serve as the primary mechanism by which citizens discipline politicians. I build a voting agency model that considers two effects of income taxes on voters’ decisions: how changes in voters’ disposable income affect their political demands and how increments in tax revenues affect voters’ beliefs about the ability of institutions to affect incumbents’ decisions. I find that increments in taxes always strengthen voters’ political demands. Nevertheless, it would not necessarily prove useful for disciplining incumbents—in terms of a higher expected provision of public goods and lower captured rents. Gains in political accountability, in turn, positively affect the equilibrium income tax rate.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":" ","pages":""},"PeriodicalIF":0.7,"publicationDate":"2023-07-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48633422","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 : 2023-07-06DOI: 10.1177/10911421231179535
Omer Bayar, T. Yarbrough
The paper investigates the fiscal impact of natural disasters in the U.S. states. The focus is on state spending, state revenues, and federal transfers for the period from 1970 to 2015. Results show that a broad definition based on dollar damages from all emergency events and major disasters has a small effect on state-level fiscal conditions, which stands in contrast to prior studies. On the other hand, a narrower definition based on the occurrence of major disasters is associated with increased spending and transfers alongside spending effects that grow with disaster severity.
{"title":"The Fiscal Consequences of Natural Disasters: Evidence from the U.S. States","authors":"Omer Bayar, T. Yarbrough","doi":"10.1177/10911421231179535","DOIUrl":"https://doi.org/10.1177/10911421231179535","url":null,"abstract":"The paper investigates the fiscal impact of natural disasters in the U.S. states. The focus is on state spending, state revenues, and federal transfers for the period from 1970 to 2015. Results show that a broad definition based on dollar damages from all emergency events and major disasters has a small effect on state-level fiscal conditions, which stands in contrast to prior studies. On the other hand, a narrower definition based on the occurrence of major disasters is associated with increased spending and transfers alongside spending effects that grow with disaster severity.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"1 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2023-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"65371430","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 : 2023-07-06DOI: 10.1177/10911421231151497
H. Houngbedji, Nassibou Bassongui
This paper investigates the mitigating role of monetary policy and governance in the tax revenue effects of commodity price volatility (CPV) in sub-Saharan Africa. We propose a dynamic panel threshold regression to take into account both the nonlinearity in the relationship between tax revenues and CPV and the endogeneity issues. The estimations show that CPV hurt tax revenues only in the high regime of CPV. Thus, a one-standard-deviation increase in CPV significantly reduces sub-Saharan Africa tax revenues. We also show that low-interest rate, better credits to the economy, and better control of corruption mitigate the detrimental effects of CPV. Sub-Saharan African policymakers should promote accommodative monetary policies, nonconventional monetary policies, and good political governance to tackle the detrimental effects of CPV.
{"title":"Monetary Policy and Governance, Commodity Price Volatility and Tax Revenues in Sub-Saharan Africa","authors":"H. Houngbedji, Nassibou Bassongui","doi":"10.1177/10911421231151497","DOIUrl":"https://doi.org/10.1177/10911421231151497","url":null,"abstract":"This paper investigates the mitigating role of monetary policy and governance in the tax revenue effects of commodity price volatility (CPV) in sub-Saharan Africa. We propose a dynamic panel threshold regression to take into account both the nonlinearity in the relationship between tax revenues and CPV and the endogeneity issues. The estimations show that CPV hurt tax revenues only in the high regime of CPV. Thus, a one-standard-deviation increase in CPV significantly reduces sub-Saharan Africa tax revenues. We also show that low-interest rate, better credits to the economy, and better control of corruption mitigate the detrimental effects of CPV. Sub-Saharan African policymakers should promote accommodative monetary policies, nonconventional monetary policies, and good political governance to tackle the detrimental effects of CPV.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"1 1","pages":""},"PeriodicalIF":0.7,"publicationDate":"2023-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"65371421","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 : 2023-05-22DOI: 10.1177/10911421231167137
J. Deskins, B. Hill
Numerous states have altered the sales factor weight in their corporate income tax (CIT) apportionment formulas. We are among the first to examine which political and economic factors are important in determining whether and when states manipulate sales factor weights. We apply survival model techniques to a panel of state-level data for the years 1985−2012. Our most striking result is that a higher CIT rate is associated with faster movement to a higher sales factor weight. Perhaps indicating that, for economic development, states use sales factor manipulation in lieu of reducing CIT rates broadly, or alternatively, that states raise sales factor weights to compensate for higher statutory CIT rates. Results also indicate that stronger growth in the CIT base and in non-corporate tax revenues hasten sales factor weight increases. Democratic control of the state government and gubernatorial election years are also important in the timing of sales factor manipulation.
{"title":"What Factors Entice States to Manipulate Corporate Income Tax Apportionment Formulas?","authors":"J. Deskins, B. Hill","doi":"10.1177/10911421231167137","DOIUrl":"https://doi.org/10.1177/10911421231167137","url":null,"abstract":"Numerous states have altered the sales factor weight in their corporate income tax (CIT) apportionment formulas. We are among the first to examine which political and economic factors are important in determining whether and when states manipulate sales factor weights. We apply survival model techniques to a panel of state-level data for the years 1985−2012. Our most striking result is that a higher CIT rate is associated with faster movement to a higher sales factor weight. Perhaps indicating that, for economic development, states use sales factor manipulation in lieu of reducing CIT rates broadly, or alternatively, that states raise sales factor weights to compensate for higher statutory CIT rates. Results also indicate that stronger growth in the CIT base and in non-corporate tax revenues hasten sales factor weight increases. Democratic control of the state government and gubernatorial election years are also important in the timing of sales factor manipulation.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"51 1","pages":"669 - 687"},"PeriodicalIF":0.7,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45821506","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 : 2023-05-22DOI: 10.1177/10911421231171760
Geoffrey Propheter
In November 2020, Colorado voters were asked to repeal the state's Gallagher Amendment, a constitutional redistributive policy in effect since 1983 that shifted the local property tax burden away from residential property on to nonresidential property. This study explores how partisanship predicts support for repealing Gallagher. Republican and Democrat platforms both entail sociotropic messages to support repeal, but following through on these political ideals carries a salient and nontrivial pocketbook cost to residential property owners. If voters aligned with one party or another are more likely to support repeal, it follows that these voters are more willing to put their money where their mouth is, so to speak. Using election precinct voting data, I find that Democrat-leaning voters were more likely to support repeal than otherwise similar Republican-leaning voters.
{"title":"Partisanship and Property Tax Redistribution: Evidence From Repealing Colorado's Gallagher Amendment","authors":"Geoffrey Propheter","doi":"10.1177/10911421231171760","DOIUrl":"https://doi.org/10.1177/10911421231171760","url":null,"abstract":"In November 2020, Colorado voters were asked to repeal the state's Gallagher Amendment, a constitutional redistributive policy in effect since 1983 that shifted the local property tax burden away from residential property on to nonresidential property. This study explores how partisanship predicts support for repealing Gallagher. Republican and Democrat platforms both entail sociotropic messages to support repeal, but following through on these political ideals carries a salient and nontrivial pocketbook cost to residential property owners. If voters aligned with one party or another are more likely to support repeal, it follows that these voters are more willing to put their money where their mouth is, so to speak. Using election precinct voting data, I find that Democrat-leaning voters were more likely to support repeal than otherwise similar Republican-leaning voters.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"51 1","pages":"619 - 648"},"PeriodicalIF":0.7,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43994253","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 : 2023-05-14DOI: 10.1177/10911421231170960
Mike Seiferling, Shamsuddin Tareq
The widespread reliance on gross government debt and deficit/surplus as indicators of fiscal performance has too often neglected the role played by other important parts of a government's balance sheet including their portfolios of financial assets. Partial measures of net worth leaves an important gap in the empirical literature on financial performance and fiscal transparency. The purpose of this paper is to examine the role played by equity investments and their performance in secondary markets. The results suggest that the performance of government equity portfolios correlates strongly with fiscal transparency to the extent that fully transparent governments are expected to generate around 7 percent higher returns than fully opaque governments. We also find strong evidence of governments willingness to inject liquidity, via investing in equities, into other sectors of the economy during periods of financial crisis confirming governments’ role as an ‘investor of last resort’.
{"title":"Hiding the Losses: Fiscal Transparency and the Performance of Government Portfolios of Financial Assets","authors":"Mike Seiferling, Shamsuddin Tareq","doi":"10.1177/10911421231170960","DOIUrl":"https://doi.org/10.1177/10911421231170960","url":null,"abstract":"The widespread reliance on gross government debt and deficit/surplus as indicators of fiscal performance has too often neglected the role played by other important parts of a government's balance sheet including their portfolios of financial assets. Partial measures of net worth leaves an important gap in the empirical literature on financial performance and fiscal transparency. The purpose of this paper is to examine the role played by equity investments and their performance in secondary markets. The results suggest that the performance of government equity portfolios correlates strongly with fiscal transparency to the extent that fully transparent governments are expected to generate around 7 percent higher returns than fully opaque governments. We also find strong evidence of governments willingness to inject liquidity, via investing in equities, into other sectors of the economy during periods of financial crisis confirming governments’ role as an ‘investor of last resort’.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"51 1","pages":"488 - 512"},"PeriodicalIF":0.7,"publicationDate":"2023-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46325440","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 : 2023-05-02DOI: 10.1177/10911421231168325
B. Heim, Ruth Winecoff
This paper examines the impact of the 529 plan tax benefits on plan participation and savings. Using state-level data on tax benefits for plan contributions and on the number of open accounts and the amount of assets under management, we estimate fixed effects regression of the use of 529 accounts as a function of measures of tax benefit generosity. Our results imply that offering a tax benefit per se does not significantly increase the percentage of children with an account or the average balances in accounts. In addition, while regression analysis suggests that offering a larger tax benefit for a moderate contribution leads to a small increase in the growth of the percentage of children with 529 savings plans and a larger tax benefit for the maximum contribution is associated with larger balances in savings plans, neither finding is sustained within multiple permutation tests and both are likely spurious.
{"title":"The Impact of State 529 Plan Tax Incentives on Take-Up and Savings","authors":"B. Heim, Ruth Winecoff","doi":"10.1177/10911421231168325","DOIUrl":"https://doi.org/10.1177/10911421231168325","url":null,"abstract":"This paper examines the impact of the 529 plan tax benefits on plan participation and savings. Using state-level data on tax benefits for plan contributions and on the number of open accounts and the amount of assets under management, we estimate fixed effects regression of the use of 529 accounts as a function of measures of tax benefit generosity. Our results imply that offering a tax benefit per se does not significantly increase the percentage of children with an account or the average balances in accounts. In addition, while regression analysis suggests that offering a larger tax benefit for a moderate contribution leads to a small increase in the growth of the percentage of children with 529 savings plans and a larger tax benefit for the maximum contribution is associated with larger balances in savings plans, neither finding is sustained within multiple permutation tests and both are likely spurious.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"51 1","pages":"455 - 487"},"PeriodicalIF":0.7,"publicationDate":"2023-05-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44991895","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 : 2023-04-20DOI: 10.1177/10911421231168724
Asa Ferguson, Liam Marshall, Jonathan C. Rork
Many states face challenges in producing accurate forecasts of tax revenue from personal income. Using data from 1996 to 2019, we look at how growth in the various base components of personal income influence the accuracy of a state's forecast of revenue from personal income taxation. We consistently find growth in capital gains, which has the highest year-to-year volatility among personal income components, to be associated with a state underestimating its actual revenues from personal income by at least 2 percentage points.
{"title":"Understanding Forecasting Errors in State Personal Income Tax Revenues: The Role of Capital Gains","authors":"Asa Ferguson, Liam Marshall, Jonathan C. Rork","doi":"10.1177/10911421231168724","DOIUrl":"https://doi.org/10.1177/10911421231168724","url":null,"abstract":"Many states face challenges in producing accurate forecasts of tax revenue from personal income. Using data from 1996 to 2019, we look at how growth in the various base components of personal income influence the accuracy of a state's forecast of revenue from personal income taxation. We consistently find growth in capital gains, which has the highest year-to-year volatility among personal income components, to be associated with a state underestimating its actual revenues from personal income by at least 2 percentage points.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"51 1","pages":"649 - 668"},"PeriodicalIF":0.7,"publicationDate":"2023-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41999206","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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