Local revenue hills

Evidence from four U.S. cities

Andrew Haughwout, Robert Inman, Steven Craig, Thomas F Luce

Research output: Contribution to journalReview article

35 Citations (Scopus)

Abstract

We provide estimates of the effects and long-run elasticities of the tax base with respect to tax rates for four large U.S. cities: Houston (property taxation), Minneapolis (property taxation), New York City (property, general sales, and income taxation), and Philadelphia (property, gross receipts, and wage taxation). Results suggest that three of our cities are near the peaks of their revenue hills; Minneapolis is the exception. A significant negative effect of a balanced-budget increase in city property tax rates on the city property base is interpreted as a capitalization effect and suggests that marginal increases in city spending do not provide positive net benefits to property owners. Estimates of the effects of taxes on city employment levels for New York City and Philadelphia-the two cities for which employment series are available-show the local income and wage tax rates have significant negative effects on city employment levels. Cuts in these tax rates are likely to be an economically cost-effective way to increase city jobs.

Original languageEnglish (US)
Pages (from-to)570-585
Number of pages16
JournalReview of Economics and Statistics
Volume86
Issue number2
DOIs
StatePublished - May 1 2004

Fingerprint

revenue
taxation
taxes
evidence
wage
income
property tax
sales
budget
Revenue
costs
Tax rate
Property taxation
Wages

Cite this

Local revenue hills : Evidence from four U.S. cities. / Haughwout, Andrew; Inman, Robert; Craig, Steven; Luce, Thomas F.

In: Review of Economics and Statistics, Vol. 86, No. 2, 01.05.2004, p. 570-585.

Research output: Contribution to journalReview article

Haughwout, A, Inman, R, Craig, S & Luce, TF 2004, 'Local revenue hills: Evidence from four U.S. cities', Review of Economics and Statistics, vol. 86, no. 2, pp. 570-585. https://doi.org/10.1162/003465304323031120
Haughwout, Andrew ; Inman, Robert ; Craig, Steven ; Luce, Thomas F. / Local revenue hills : Evidence from four U.S. cities. In: Review of Economics and Statistics. 2004 ; Vol. 86, No. 2. pp. 570-585.
@article{41218ae396b2442a866100fc9cece6cf,
title = "Local revenue hills: Evidence from four U.S. cities",
abstract = "We provide estimates of the effects and long-run elasticities of the tax base with respect to tax rates for four large U.S. cities: Houston (property taxation), Minneapolis (property taxation), New York City (property, general sales, and income taxation), and Philadelphia (property, gross receipts, and wage taxation). Results suggest that three of our cities are near the peaks of their revenue hills; Minneapolis is the exception. A significant negative effect of a balanced-budget increase in city property tax rates on the city property base is interpreted as a capitalization effect and suggests that marginal increases in city spending do not provide positive net benefits to property owners. Estimates of the effects of taxes on city employment levels for New York City and Philadelphia-the two cities for which employment series are available-show the local income and wage tax rates have significant negative effects on city employment levels. Cuts in these tax rates are likely to be an economically cost-effective way to increase city jobs.",
author = "Andrew Haughwout and Robert Inman and Steven Craig and Luce, {Thomas F}",
year = "2004",
month = "5",
day = "1",
doi = "10.1162/003465304323031120",
language = "English (US)",
volume = "86",
pages = "570--585",
journal = "Review of Economics and Statistics",
issn = "0034-6535",
publisher = "MIT Press Journals",
number = "2",

}

TY - JOUR

T1 - Local revenue hills

T2 - Evidence from four U.S. cities

AU - Haughwout, Andrew

AU - Inman, Robert

AU - Craig, Steven

AU - Luce, Thomas F

PY - 2004/5/1

Y1 - 2004/5/1

N2 - We provide estimates of the effects and long-run elasticities of the tax base with respect to tax rates for four large U.S. cities: Houston (property taxation), Minneapolis (property taxation), New York City (property, general sales, and income taxation), and Philadelphia (property, gross receipts, and wage taxation). Results suggest that three of our cities are near the peaks of their revenue hills; Minneapolis is the exception. A significant negative effect of a balanced-budget increase in city property tax rates on the city property base is interpreted as a capitalization effect and suggests that marginal increases in city spending do not provide positive net benefits to property owners. Estimates of the effects of taxes on city employment levels for New York City and Philadelphia-the two cities for which employment series are available-show the local income and wage tax rates have significant negative effects on city employment levels. Cuts in these tax rates are likely to be an economically cost-effective way to increase city jobs.

AB - We provide estimates of the effects and long-run elasticities of the tax base with respect to tax rates for four large U.S. cities: Houston (property taxation), Minneapolis (property taxation), New York City (property, general sales, and income taxation), and Philadelphia (property, gross receipts, and wage taxation). Results suggest that three of our cities are near the peaks of their revenue hills; Minneapolis is the exception. A significant negative effect of a balanced-budget increase in city property tax rates on the city property base is interpreted as a capitalization effect and suggests that marginal increases in city spending do not provide positive net benefits to property owners. Estimates of the effects of taxes on city employment levels for New York City and Philadelphia-the two cities for which employment series are available-show the local income and wage tax rates have significant negative effects on city employment levels. Cuts in these tax rates are likely to be an economically cost-effective way to increase city jobs.

UR - http://www.scopus.com/inward/record.url?scp=2442570634&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=2442570634&partnerID=8YFLogxK

U2 - 10.1162/003465304323031120

DO - 10.1162/003465304323031120

M3 - Review article

VL - 86

SP - 570

EP - 585

JO - Review of Economics and Statistics

JF - Review of Economics and Statistics

SN - 0034-6535

IS - 2

ER -