State and Local

State and Local

Research

Thomas Stratmann, Andreea Militaru, Rachel Reese | Aug 21, 2014
State and local governments often turn to increases in sales taxes to generate added revenue. Estimates of fresh revenue from the higher tax tend to be overly optimistic, partly because the number of sales tax exemptions tends to rise with the rising tax rate.
Eric A. Scorsone | Jul 24, 2014
This paper provides a comprehensive overview of these state policies and some of the factors that may have influenced the adoption of such policies.
Pavel A. Yakovlev | Jul 10, 2014
This study investigates the relationship between various measures of economic performance and taxation in a longitudinal panel of American states.
Christopher Coyne, Lotta Moberg | May 16, 2014
The governments of American states often attempt to incentivize businesses to locate within their borders by offering targeted benefits to particular industries and companies. These benefits come in many forms, including business tax credits for investments, property tax abatements, and reductions in the sales tax. Despite good intentions, policymakers often overlook the unseen and unintended negative consequences of targeted-benefit policies. This paper analyzes two major downsides of these policies: (1) they lead to a misallocation of resources, and (2) they encourage rent-seeking and thus cronyism. We argue that these costs, which are often longer-term and not readily observable at the time the targeted benefits are granted, may very well outweigh any possible short-term economic benefits.
Jeremy Horpedahl, Harrison Searles | Mar 06, 2014
Removing the federal tax deduction for state and local taxes would make taxes more equitable throughout the nation, as both high-tax and low-tax states are treated equally by the federal government. It may also provide an efficiency boost for states and localities, as they abandon some services that could be better provided by private companies. The removal of this deduction would also allow federal marginal tax rates to be cut across the board, providing a secondary boost to the economy while still remaining revenue-neutral at the federal level.
Justin M. Ross | Feb 25, 2014
The primer begins with a short discussion of criteria for evaluating tax revenue options (i.e., economic efficiency, equity, transparency, collectability, and revenue production). It proceeds to an overview of the different types of taxes employed at various levels of government and an evaluation of each tax against these criteria. The tax categories included here are individual income taxes, consumption taxes, real property taxes, and corporate income taxes.

Testimony & Comments

James Broughel | Sep 02, 2014
This year’s report makes several important improvements over reports from previous years. However, there are still a number of ways in which this report can be made more useful if it is to be a meaningful representation to Congress and the American public of the effects of the regulatory system in the United States.
Matthew Mitchell | Oct 04, 2011
Matthew Mitchell testified before the House Committee on the Judiciary about state governments' experiences with Balanced Budget Amendments.
Russell Roberts | Feb 16, 2011
Russell Roberts testified before the House Committee on Government Oversight and Reform on the second anniversary of the stimulus.
Eileen Norcross | Feb 09, 2011
Eileen Norcross testified before the U.S. House Committee on Oversight and Government Reform on the looming municipal debt crisis.
Richard Williams, Jerry Ellig, John Morrall | Jul 06, 2010
As always, OMB has produced a very thorough report based on the instructions provided in the Regulatory-Right-to Know Act. Nevertheless, it is time to re-examine this report to see if it can be made…
Jerry Brito | Mar 20, 2009
Senior Research Fellow Jerry Brito presents his ideas on transparency in the stimulus bill in this testimony before the House Committee on Oversight and Government…

Research Summaries & Toolkits

Speeches & Presentations

Expert Commentary

Sep 02, 2014

With summer nearly over, and school years starting again across the county, many states are declaring this time of year a holiday season of sorts: a “tax holiday” season. This year, 17 states will create tax-free holidays to exempt many back-to-school items from state sales tax.
Aug 18, 2014

Several states cut a wide variety of taxes this summer. Indiana and Rhode Island, for example, cut the conventional corporate tax. Idaho, meanwhile, took an unconventional route by cutting sales taxes on software purchased through “the cloud.” When revenues are on the rise, some states choose to lower taxes, while others prefer to spend the tax windfall. Both moves could be wrong.
Aug 11, 2014

Lasting pension reform has three pieces: 1) Fund the benefits earned to date. 2) Stop the bleeding and close the current defined benefit plan. 3) Switch workers to a defined contribution-style plan that could include an annuity option and the features of a traditional pension that public sector workers prefer.
Jun 27, 2014

Across the nation, states and cities are struggling to keep up with their obligations to fund state worker pensions. Detroit--desperately trying to reduce its obligations in federal bankruptcy court--is the classic example. But the financial sinkhole swallowing Detroit is spreading throughout the country at an alarming rate.
Jun 23, 2014

Simple tweaks to Indiana’s tax system will be insufficient to attract leading firms and spur the success of those at home; reforms must be part of a well-planned growth strategy. If the Hoosier State wants to position itself as a global competitor, its leaders must approve a comprehensive plan that lightens the tax burden on citizens and businesses in a way that allows government to serve the people by performing its core functions.
Jun 16, 2014

Consider the “Red Flag Laws” of the late 19th century, which required early automobiles traveling on roads to be preceded by a man on foot waving a red flag in order to warn others on horses of the vehicle’s approach.

Charts

This week’s maps use data from the Export-Import Bank and the US Census Bureau to display the effect of Ex-Im Bank financing on each state. The maps show that Washington state, home of Boeing, garners the bulk of the benefits in terms of both Ex-Im Bank disbursements and as a percentage of total state export value, even though taxpayers across the nation are equally exposed to liability.

Experts

Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University, where he is the lead scholar on the Project for the Study of American Capitalism. He is also an adjunct professor of economics at Mason. In his writing and research, he specializes in economic freedom and economic growth, public-choice economics, and the economics of government favoritism toward particular businesses.
Eileen Norcross is a senior research fellow at the Mercatus Center at George Mason University. As lead researcher on the Mercatus Center’s State and Local Policy Project, she focuses on questions of public finance and how economic institutions support or hamper economic resiliency and civil society. She specializes in fiscal federalism and institutions, state and local governments and finance, pensions, public administration, and economic development.
The Honorable Maurice McTigue, QSO, is vice-president at the Mercatus Center at George Mason University. He is director of the Mercatus Center’s Government Accountability Project and a member of its Spending and Budget Initiative and State and Local Policy Project.
William P. Ruger is an assistant professor in the political science department at Texas State University. He has been an affiliated scholar with the Mercatus Center at George Mason University since 2008.
Jason Sorens is an assistant professor in the political science department at the University at Buffalo (SUNY). He has been an affiliated scholar with the Mercatus Center at George Mason University since 2008. …

Podcasts

Patrick McLaughlin, Michael Leland | August 12, 2014
In this episode, Patrick McLaughlin joins Mike Leland to discuss his new project, RegData, and how it can help measure the impact of regulations, like occupational licensing and those Uber and Lyft are confronting, in states.

Recent Events

Please join the Mercatus Center's Capitol Hill Campus and Professor Bruce Yandle for an update on the state of the national economy. Dr. Yandle is the Distinguished Adjunct Professor of Economics at the Mercatus Center and Dean Emeritus of Clemson College of Business and Behavioral Sciences.

Books

William Ruger, Jason Sorens | Mar 28, 2013
Now in its third edition, Freedom in the 50 States presents a completely revised and updated ranking of the American states based on how their policies promote freedom in the fiscal, regulatory, and personal realms.

Media Clippings

Eileen Norcross | Feb 02, 2014
Eileen Norcross cited at The New York Times.
Sarah Arnett | Jan 17, 2014
The Mercatus Center cited at Philly.com.
Sarah Arnett | Jan 16, 2014
The Mercatus Center cited at Investor's Business Daily.
| Jan 16, 2014
Mercatus cited at Union Leader.
Adam Thierer | Oct 08, 2013
Adam Thierer cited at Politico.
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