Who pays and who benefits? The impact of state tax and expenditure limits on tax progressivity and redistributive spending
Journal of Public Budgeting, Accounting & Financial Management
ISSN: 1096-3367
Article publication date: 1 March 2012
Abstract
This paper investigates the impact of state governments’ “Tax and Expenditure Limits” (TELs) on their tax progressivity and redistributive spending. A two stage least squares (2SLS) regression model of data covering 1985-2007, was employed to allow for simultaneity in the relationships between intergovernmental transfer, tax progressivity, expenditure progressivity, and labor mobility. This model tested whether high- or low income residents had paid for and benefited from these fiscal institutions. As a result we find that TELs significantly decrease tax progressivity and increase poverty rate. These two policy effects should be explicitly accounted for in the design or revision of TELs.
Citation
Qian Wang, J. (2012), "Who pays and who benefits? The impact of state tax and expenditure limits on tax progressivity and redistributive spending", Journal of Public Budgeting, Accounting & Financial Management, Vol. 24 No. 4, pp. 660-682. https://doi.org/10.1108/JPBAFM-24-04-2012-B005
Publisher
:Emerald Publishing Limited
Copyright © 2012 by PrAcademics Press