Tax structure and public sector growth

It has been hypothesized that a jurisdiction's tax structure exerts an indipendent effect upon the growth of its public sector. We test this hypothesis by examining the relationship between the growth of state general expenditure and the elasticity of tax revenues with respect to income. The wo...

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Bibliographic Details
Published in:Journal of public economics 1987-03, Vol.32 (2), p.185-201
Main Authors: Feenberg, Daniel R, Rosen, Harvey S
Format: Article
Language:English
Subjects:
Economic theory
Growth
Hypotheses
Mathematical models
Public sector
Regression analysis
Structure
Taxation
Taxes
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Summary:It has been hypothesized that a jurisdiction's tax structure exerts an indipendent effect upon the growth of its public sector. We test this hypothesis by examining the relationship between the growth of state general expenditure and the elasticity of tax revenues with respect to income. The work takes advantage of a very careful set of income elasticities for the personal income and sales tax systems for each state, for every year from 1978 to 1983. The main conclusion is that the data do not support the notion that the form of the tax structure exerts an independent effect on public sector growth.
ISSN:0047-2727
1879-2316
DOI:10.1016/0047-2727(87)90011-9