Vertical income tax externalities and fiscal interdependence: evidence from the US

By Alejandro Esteller‐Moré, alberT solé-ollé. 2001

182 citations recorded by the source corpus.

Concurrent taxation is a feature of many federal systems. As a consequence of this fact, the tax policy of one level of government affects the tax base of the other. This paper carries out a theoretical analysis of the interdependent tax-setting decisions of federal and regional governments, paying special attention to institutional features that characterise the U.S. federal system in practice and that formally link the taxes employed at various levels of government (i.e.: tax deductibility). The developed hypotheses are tested with data corresponding to the U.S. personal income taxes for the last decade. We find that when the federal government increases taxes, there is a significant positive response of regional taxes.

Subfields: Accounting, Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/5c729b359a9543e3b859ec7f7bc7d98f8127613e

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Citations in the corpus

Vertical Versus Horizontal Tax Externalities: An Empirical Test (2006, background): “Besley and Rosen (1998), who studied excise taxes, and Esteller-Moré and Solé-Ollé (2001), who looked at personal income and general sales taxes, found that US state taxes historically reacted positively to increases in federal taxes.”
Does `Smart Growth' Matter to Public Finance? (2008, background): “…five 7 Identifying different types of spillovers and their behavioral mechanisms is a complicated venture in-and-of-itself: See, for example, Esteller-Moré and Solé-Ollé (2001), Revelli (2001, 2002, 2003), Bordignon et al. (2003), Lundberg (2006), and Solé-Ollé (2006). categories of…”
Horizontal And Vertical Indirect Tax Competition : Theory And Some Evidence From The Usa (2007, background): “Esteller-More and Sole-Olle (2001) study strategic interaction between US states and federal government in the setting of income taxes, along the lines of Besley and Rosen.”