Showing posts with label state tax policy. Show all posts
Showing posts with label state tax policy. Show all posts
Monday, July 2, 2018
Progressives Logroll Themselves Out of a Pro-Tax Constitutional Amendment … But For How Long? | NewBostonPost
My latest contribution to NewBostonPost.com: A look at last week's SJC ruling on the so-called "millionaire's tax." Link
Thursday, December 7, 2017
Monday, August 14, 2017
Is it worth it to compare state sales taxes when making a purchase?
A new National Bureau of Economic Research working paper from Scott R. Baker, Stephanie Johnson and Lorenz Kueng that might underscore the ongoing effects of interstate sales tax competition.
Abstract:
Using comprehensive high-frequency state and local sales tax data, we show that household spending responds strongly to changes in sales tax rates. Even though sales taxes are not observed in posted prices and have a wide range of rates and exemptions, households adjust in many dimensions, stocking up on storable goods before taxes rise and increasing online and cross-border shopping. Interestingly, households adjust spending similarly for both taxable and tax-exempt goods. We embed an inventory problem into a continuous-time consumption-savings model and demonstrate that this seemingly irrational behavior is optimal in the presence of shopping trip fixed costs. The model successfully matches estimated short-run and long-run tax elasticities with a reasonable implied reservation wage of $7-10. We provide additional empirical evidence in favor of this new shopping-complementarity mechanism. While our results reject non-salience of sales tax changes, on average, we also show that upcoming tax changes that are more salient prompt larger responses.
The paper, "Shopping for lower state sales tax rates," can be found here.
Abstract:
Using comprehensive high-frequency state and local sales tax data, we show that household spending responds strongly to changes in sales tax rates. Even though sales taxes are not observed in posted prices and have a wide range of rates and exemptions, households adjust in many dimensions, stocking up on storable goods before taxes rise and increasing online and cross-border shopping. Interestingly, households adjust spending similarly for both taxable and tax-exempt goods. We embed an inventory problem into a continuous-time consumption-savings model and demonstrate that this seemingly irrational behavior is optimal in the presence of shopping trip fixed costs. The model successfully matches estimated short-run and long-run tax elasticities with a reasonable implied reservation wage of $7-10. We provide additional empirical evidence in favor of this new shopping-complementarity mechanism. While our results reject non-salience of sales tax changes, on average, we also show that upcoming tax changes that are more salient prompt larger responses.
The paper, "Shopping for lower state sales tax rates," can be found here.
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