TAX EXPORTING AND STATE REVENUE STRUCTURES: ABSTRACT

We investigate the effects of changes in the potential for federal offset and price/ migration tax exporting on state tax policy. The proposed empirical model considers the disaggregated, simultaneously determined nature of state taxing and spending decisions. The 3SLS results suggest that federal deductibility provisions have a statistically significant effect on state tax structures and that there is considerable substitution between the income and general sales taxes. The evidence on price/ migration tax exporting indicates that price/migration effects exist as predicted in most instances.