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Base Mobility and State Personal Income Taxes

Bruce, Donald, Fox, William F., and Yang, Zhou

Abstract:

In the spirit of the elasticity of taxable income literature, which has primarily considered federal taxes using individual data, we estimate panel regressions of state personal income tax bases on state tax rates, structures, and other controls. We consider actual tax base data gathered directly from revenue officials, a calculated tax base defined as collections divided by the top tax rate, and total AGI on federal returns. Results indicate that higher marginal tax rates have no impact on actual bases reported by the states, small negative effects on federal AGI, and larger negative effects on calculated bases.

Citation

Bruce, Donald, Fox, William F., and Yang, Zhou (2010), Base Mobility and State Personal Income Taxes, National Tax Journal, 63:4, pp. 945-66

DOI: dx.doi.org/10.17310/ntj.2010.4S.06