Tax Policy

Tax Policy

Research

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.
Andreea Militaru, Thomas Stratmann | Jan 07, 2014
We analyze the choice politicians face when seeking votes from groups that lobby for sales tax rate decreases or from groups that lobby for certain tax exemptions, given the constraint that each politician wants to raise a certain amount of revenue. Using the application of sales taxes and sales tax exemptions we develop a model predicting a positive relationship between the number of sales tax exemptions and the sales tax rate. We find support for this hypothesis. A one-unit increase in the number of exemptions is associated with an increase between 0.10 and 0.25 percent in the sales tax rate. Our results provide one explanation of why estimates of revenue increases generated by a sales tax increase are often too optimistic.
Bruce Yandle | Mar 01, 2013
There was only one lane open as I made my trip to Atlanta; the other three were blocked with those unhappy yellow and black make-believe barrels used by the highway folks. Traffic flow was constrained by efforts to repair potholes and broken pavement. We in the slow lane had little choice in the matter. Instead of 70, we were slowed to 20 miles per hour. We had to accept our fate, or find another route at the next exit.
Jason J. Fichtner, Nick Tuszynski | Nov 02, 2011
Firms respond to high tax rates and relocate economic activity to lower-tax countries. Thus, the current U.S. corporate tax structure places U.S.-headquartered corporations at a tremendous disadvantage in the global marketplace because other countries have lowered their corporate income tax rates to welcome multinational corporations. This paper discusses the economic implications of corporate taxes.
Eileen Norcross, Benjamin J. VanMetre | Oct 11, 2011
It is important to understand that Illinois’s current fiscal crisis is not the result of a single critical event but rather a series of events in Illinois’s economic and fiscal history. This paper uncovers why Illinois's 2012 budget strategies are unlikely to work.

Testimony & Comments

Research Summaries & Toolkits

Expert Commentary

Feb 19, 2014

The Academy Awards are nearly upon us, and that means long-winded acceptance speeches from actors and directors, filled with thanks for all the people who have helped them along the way. Listen closely to those speeches. Because they should really be thanking you.
Aug 05, 2013

As back-to-school shopping gets under way, many states are offering shoppers a sales-tax-free weekend in an attempt to help consumers and retailers alike. However, researchers at the Mercatus Center at George Mason University have found that the tax holidays do little to help the economy and allow government officials to favor some business and industries over others.
Jul 19, 2013

Detroit became the largest city in U.S. history to declare bankruptcy when it filed for Chapter 9 protection on Thursday. Mercatus experts weigh in:…
Jul 11, 2013

North Carolina lawmakers cut unemployment benefits by one-third. This disqualifies the state from receiving $700 million in federal funds for the long-term unemployed, affecting 170,000 jobless North Carolinians.
By Antony Davies, James R. Harrigan |
Jun 12, 2013

Pennsylvania Senate Majority Leader Dominic Pileggi has announced that he will introduce legislation to uncap Pennsylvania's Film Production Tax Credit (FPTC) in an effort to entice production companies to film in the commonwealth.
By Nita Ghei |
May 06, 2013

Just a few years ago, retail giant Amazon primarily stood on the sidelines of the debate over federal legislation – dubbed the Main Street Fairness Act – to require online retailers to collect sales taxes. But now Amazon is front and center supporting the current iteration of the bill wending its way through Congress. Amazon's support aside, the tax revenues that states may be able to extract would be far dwarfed by the damage the legislation inflicts on growth, innovation and competition, and by further entrenching cronyism in our already troubled economy.

Charts

This chart puts Amazon’s domestic sales in perspective with total retail sales.

Experts

Podcasts

Jason Sorens | July 03, 2013
Jason Sorens Discusses Freedom in the 50 States on American Radio Journal

Recent Events

Join us to discuss these questions: • Do TELs Limit Budget Growth? • What do states need to know before implementing a TEL? • How would a TEL affect your state? Matthew Mitchell, Research Fellow, Mercatus Center at George Mason University Assembly Member Micah Kellner, New York 65th District Nick Kasprak, Programmer and Analyst, Tax Foundation…

Media Clippings

Matthew Mitchell | Jul 28, 2013
The Governor’s Opportunity Fund — just one of numerous economic-incentive programs operated by the state — is something like a slush fund the governor can use to “secure a business location or expansion project.”…
Matthew Mitchell | Jul 11, 2013
[A]s my research has emphasized, privileges lead to a host of economic problems because they undermine competition, encourage wasteful privilege-seeking, and put politicians rather than consumers in charge of allocating capital and resources.
Jason J. Fichtner | Dec 05, 2012
Jason Fichtner cited at The Washington Times.
Eileen Norcross | Jul 11, 2012
Eileen Norcross is quoted in the guardian discussing the straining budgets of state and local governments in the U.S.
Antony Davies | Feb 19, 2012
Antony Davies explains why Nevada Gov. Brian Sandoval's economic development plan is a step in the wrong direction.
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