Horizontal And Vertical Indirect Tax Competition : Theory And Some Evidence From The Usa

By Michael P. Devereux, Ben Lockwood, Michela Redoano. 2007

270 citations recorded by the source corpus.

This paper provides a simple theoretical framework for analyzing simultaneous vertical and horizontal competition in excise taxes, and estimates equations informed by the theory on a panel of US state and federal excise taxes on cigarettes and gasoline. We also examine the role played by smuggling. The results are generally consistent with the theory, when the characteristics of the markets for the goods are taken into account. For neither good do federal excise taxes affect state taxes. Taxes in neighboring states have a significant and large effect in the case of cigarettes, and a much weaker effect in the case of gasoline. we also find that in the setting of cigarette taxes, concerns about cross-border shopping play a more important role than concerns about smuggling.

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

View Paper: https://www.semanticscholar.org/paper/90a6c04322d12be8a1f25e7c9378369683e597b5

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Citations in the corpus

Fuel Tax Incidence and Supply Conditions (2011, methodology): “The number of heating degree days in a month, commonly used to model heating demand, is defined as the sum of the daily number of degrees the temperature is below 65.(14) We also measure state heating oil prevalence using the fraction of households in a state (11)The EIA surveys prices for states us”
Strategic interaction in political competition: Evidence from spatial effects across Chinese cities (2016, methodology): “…allows multiple 5Other studies on tax competition include Besley and Case (1995), Besley and Smart (2007), Bosch and Solé-Ollé (2007), Brueckner and Saavedra (2001), Edwards and Keen (1996), Buettner (2001), Devereux et al. (2007), Hayashi and Boadway (2001), Revelli (2006), and Rork (2003).”
Business Taxes and the Electoral Cycle (2012, background): “Recent theoretical and empirical papers stress that corporate tax rate choices are influenced by the size and structure of the economy, the government’s budgetary situation and tax competition behavior (see e.g. Bucovetscy, 1991; Wilson, 1999; Buettner, 2003; Devereux et al., 2007).”