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IEB10-03_Esteller+Rizzo.pdf (533.79 KB)

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Working paper

Publication date

2010

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cc-by-nc-nd, (c) Esteller et al., 2010
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116647

Politics or mobility? Evidence from US excise taxation

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Abstract

We test for the state interdependence of gasoline and cigarette taxation in the US (1975-2006). We estimate a tax reaction function, and find that state interdependence is due solely to yardstick competition, since any interaction disappears completely in the case of states with lame duck governors. This result holds for both taxes: the short-run reaction of those states whose governor is eligible to stand for reelection is 0.13 and 0.21 for gasoline and cigarette taxation, respectively. In the long run, the cigarette tax rates levied in a jurisdiction match those of its neighbors perfectly, while the long-run reaction in the case of gasoline is much lower at 0.72.

Subject

Impostos, Política fiscal, Relacions fiscals intergovernamentals

Subject (English)

Taxation, Fiscal policy, Intergovernmental fiscal relations

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IEB (Institut d’Economia de Barcelona) – Working Papers

Citation

ESTELLER MORÉ, Alejandro and RIZZO, Leonzio. Politics or mobility? Evidence from US excise taxation. IEB Working Paper 2010/03. [consulted: 7 of August of 2026]. Available at: https://hdl.handle.net/2445/116647

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