Empirical evidence of practical considerations in local government tax portfolio composition: consequences of SPLOST taxes
Transforming Government: People, Process and Policy
ISSN: 1750-6166
Article publication date: 21 July 2022
Issue publication date: 18 October 2022
Abstract
Purpose
The purpose of this study is to explore and explain, through practical considerations, the ever-increasing presence of local option sales taxes and “special purpose” local option sales taxes (SPLOST) in the composition of the tax portfolio of local governments.
Design/methodology/approach
This research is designed as a case study of county-level fiscal trends in Washington counties between 1990 and 2018. Data were collected for all 39 Washington counties for 29 years in three domains: revenue, crime and society. Observations were fitted to longitudinal models for tests of cointegration or trend, or to cross-sectional regression models for tests of predictive quality.
Findings
This study shows that the stated “special purpose” does not influence a county’s decision to impose a SPLOST. Furthermore, this study finds that indicators of educational attainment, income, poverty, unemployment and rural areas are the largest predictors of a county’s propensity to change the composition of its revenue portfolio in favor of the sales tax.
Originality/value
To the best of the author’s knowledge, this is the first study to explore whether indicators of a stated “special purpose” are statistically related to a county’s propensity to adopt a particular SPLOST. This study concludes that a county’s decision to adopt a SPLOST does not depend on the stated “special purpose.” In addition, it shows that urbanized counties with higher per capita income and education levels, but lower unemployment and poverty, can predictably import sales tax revenue from neighboring jurisdictions. This is a significant finding as it may explain why SPLOST is gaining popularity.
Keywords
Acknowledgements
Data availability statement: The data set compiled for this study consists of publicly available data. The data set is available upon reasonable request from the corresponding author, F.A.
Citation
Ambrosio, F. (2022), "Empirical evidence of practical considerations in local government tax portfolio composition: consequences of SPLOST taxes", Transforming Government: People, Process and Policy, Vol. 16 No. 4, pp. 488-503. https://doi.org/10.1108/TG-05-2022-0063
Publisher
:Emerald Publishing Limited
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