The Influence Of State Sales And Use Taxes On Manufacturers’ Capital Expenditures And Employment
Keywords
economic development; sales and use tax; state tax policy; tax incentives
Abstract
This study investigates the relationship between the state sales and use tax (SUT) burden and manufacturing firms’ employment and capital expenditures for the period 1983–2006. Using an instrumental variable model, our results indicate that the SUT burden (i.e., the product between the sales and use tax rate and sales and use tax exemptions) on purchases of materials and machinery is related to changes in capital expenditures and employment, even after controlling for corporate income tax variables and other economic factors. The economic impact of this relationship is relatively small; however, the results have important policy implications in the present lean state budget environment, as state legislators must balance revenue needs with the desire to provide economic development incentives.
Publication Date
7-12-2015
Publication Title
Public Finance Review
Volume
43
Issue
4
Number of Pages
458-484
Document Type
Article
Personal Identifier
scopus
DOI Link
https://doi.org/10.1177/1091142113505192
Copyright Status
Unknown
Socpus ID
84930806754 (Scopus)
Source API URL
https://api.elsevier.com/content/abstract/scopus_id/84930806754
STARS Citation
Hageman, Amy; Bobek, Donna; and Luna, Le Ann, "The Influence Of State Sales And Use Taxes On Manufacturers’ Capital Expenditures And Employment" (2015). Scopus Export 2015-2019. 889.
https://stars.library.ucf.edu/scopus2015/889