The Effect of Federal Tax Deductibility on State and Local Taxes and Spending

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The Effect of Federal Tax Deductibility on State and Local Taxes and Spending

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Title: The Effect of Federal Tax Deductibility on State and Local Taxes and Spending
Author: Metcalf, Gilbert; Feldstein, Martin

Note: Order does not necessarily reflect citation order of authors.

Citation: Feldstein, Martin, and Gilbert Metcalf. 1987. The effect of federal tax deductibility on state and local taxes and spending. Journal of Political Economy 95(4): 710-736.
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Abstract: This paper examines the effect of federal deductibility of state and local taxes on the fiscal behavior of state and local governments. The primary finding is that deductibil ity affects the way that state and local governments finance their sp ending as well as the overall level of spending. More specifically, i n states in which federal deductibility implies a relatively low cost of using deductible personal taxes (including income, sales, and pro perty taxes), there is greater reliance on those taxes and less reliance on business taxes and other revenue sources. The effect of deductibility on the state and local financial mix implies that deductibility has a much lower cost to the federal government than has previously been assumed.
Published Version: http://dx.doi.org/10.1086/261482
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:2766699
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