THE LONG-RUN ECONOMIC IMPACTS OF FEDERAL,STATE, AND LOCAL FISCAL POLICIES IN METROPOLITAN AREAS*

ABSTRACT. This paper uses new estimates of metropolitan factor demand and output supply functions to study how federal, state, and local fiscal policies affect metropolitan economies. We illustrate our work with findings for ten metropolitan areas in five states for changes in state corporate income taxes, local property taxes, the federal corporate income tax, an investment tax credit, interest rates, public capital stocks, output prices, and tax and regulatory policies affecting gross wages. It is clear from these simulations that a policy that is nominally the same everywhere will have repercussions that vary widely across regions and cities.     

A Logistic Regression Model Explaining Recent State Casino Gaming Adoptions

The scholarly literature has argued that state fiscal stress, interstate tax competition, political feasibility, and economic development goals were the main reasons underlying the adoption of casino gaming by several American states. Archival data were collected and analyzed using logistic regression in an attempt to explain why some states have adopted casino gaming and others have not. Four statistically significant predictors of state casino gaming adoptions were discovered: moderate aggregate state ideological identifications, 1990 per capita tax rankings by state, longitudinal changes in state per capita taxes, and longitudinal changes in state job growth. These results suggest that motives related to political feasibility and economic development provide the best explanation of recent state casino gaming adoptions.     

INFLATION, PROGRESSIVITY, AND STATE INCOME TAX REVENUES

The combination of progressive income tax structures and inflation has led to significant increases in state income tax revenues. While the federal government has de facto indexed the federal personal income tax, states have generated large relative and absolute increases in their income tax revenues. This paper shows that the ratio of income tax revenues to personal income has grown significantly more in states with progressive income tax structures than those with proportional tax structures. Almost half of such increases may be attributed to inflation. The increase in the relative share of income tax as a source of state revenues has recently run into resistance in some states which have installed income tax indexation measures. This may suggest that the marginal cost of raising revenue through inflation, relative to other means (taxes), is reaching its limits.     

The Politics of Motor Fuel Taxes and Infrastructure Funds in France and the United States

The US. and France have adopted contrasting models of motor fuel tax and highway finance policy. Fuel tax revenues are dedicated to state and federal highway funds in America, keeping taxes quite low, but preventing them from contributing to the general treasury. French motor fuel taxes are higher and make up nearly 11 percent of the central government's general revenues, excluding social security contributions. French highway finance relies heavily on tolls. Pressure from the US. federal deficit has reduced the highway trust fund's ability to protect highway spending from budgetary competition. Political and procedural changes in Congress make it likely that the U.S.will move away from exclusive dedication of motor fuel taxes.     

THE EFFECTS OF TAXES,EXPENDITURES, AND PUBLIC INFRASTRUCTURE ON METROPOLITAN AREA EMPLOYMENT*

ABSTRACT. Data for 28 metropolitan areas over a 15-year period are used to determine the impacts of government spending, taxes, and public infrastructure on total employment and disaggregated employment. After carefully controlling for the government budget constraint we find that taxes are negatively related to total employment and education spending is positively related to total employment. Nevertheless, we find that it is difficult for metropolitan areas to influence the composition of their employment with government tax and expenditure policies. Moreover, at current levels of public infrastructure, marginal changes in infrastructure have no strong effect on employment.     

WHO PAYS THE SEVERANCE TAX?

Over the past four years, taxes levied by states on energy production have become a source of contention between the “energy have” and “energy have–not” regions of the nation. The popular notion that the taxes are shifted forward to consumers has gone virtually unchallenged in the policy debate. This paper examines the incidence and burden of severance taxes and also assesses the impact of severance taxation on production, investment, and land use. The author concludes that severance taxes are not shifted forward to consumers but are borne by producers and resources owners in the form of reduced profits and rents.     

THE IMPACT OF ECONOMIC OPPORTUNITY, AMENITIES AND FISCAL FACTORS ON AGE-SPECIFIC MIGRATION RATES

ABSTRACT. Migration models have considered several different categories of determinants, including economic opportunities, amenities, and state and local fiscal factors. Migration has also been shown to depend on the individual's position in the life cycle. This paper represents a first attempt to integrate all three categories of determinants of migration into a life-cycle framework. Empirical findings generated from a countrywide model of white male migration, over the period 1970 to 1980, reveal that all three types of determinants are important. Specifically, economic opportunities are most influential for males during their working years. Amenities are also found to follow a life-cycle pattern with older migrants more attracted to amenable locations than their younger cohorts. Finally, state income and death taxes display life-cycle effects; working males in their peak earning years are detracted by high income taxes while all migrants aged 55 to 69 avoid counties in states with high inheritance and estate taxes.     

Not My Taxes! Explaining Tax Resistance and its Implications for Australia's Welfare State

In discussing Australia's need to increase taxes to pay for future social security, Michael Keating worries that voters see taxes as a ‘burden’ and that ‘the link between taxation and citizenship has been broken’. This paper deals with the problem of tax resistance (preferring lower taxes even when tax cuts risk public services) for Australia's welfare state. First, I describe how two Australian fiscal institutions—a residual welfare system and visible income taxes—promote tax resistance among voters. Second, I draw on these insights to develop several explanations for tax resistance: voter self-interest, voter hostility to minorities, voter disengagement (low trust and lack of interest in politics), and individualistic attitudes. The main conclusion is that tax resistance in Australia is institutionalised, making it easier to mobilise interests around low taxes, and harder to advocate for alternatives. Results of multivariate analysis using AES 2004 data indicate that an ‘anti-tax coalition’ can build on three diverse publics; one of higher and middle-income earners attuned to self-interest, another hostile to welfare beneficiaries, and another ‘tuned out’ of politics and willing to support any call for tax cuts. Inevitably, the debate about the welfare state is shadowed by a debate about voter willingness to pay taxes that finance it.     

STATE REVENUE ELASTICITY AND EXPENDITURE GROWTH

Recent analyses and theories of public choice suggest faster public sector expansion in states with highly elastic revenue structures. This paper estimates the contribution of elasticity of tax revenues to the growth of expenditures in the 50 American states since 1960, based on elasticity measures for state revenue sources compiled by the Advisory Commission on Intergovernmental Relations, an index of state tax structural change, and controls for federal aid to states, population increase, and per capita growth in real income. Results for 1960-1970 show a small positive relationship between revenue elasticity and expenditure growth, but this becomes weak and negative for 1970-1976. Spending has increased most in states with the least elastic revenue sources; these states have made considerable changes in tax laws, while states with elastic revenue sources have been more likely to cut taxes than to increase spending. Federal aid, rather than tax elasticity, is the best predictor of state expenditure growth, while legislative changes in tax structure have enabled states to keep pace with rising demand for revenue due to growth in population and real income.     

Pigs, presses and pastoralism: farming in the fifth to sixth centuries AD

The fifth to sixth centuries were a time of significant change in rural settlement, land use, production levels and productive technology in many regions. Archaeological and related discoveries suggest that in western Europe, specialized market- and state-oriented production gave way to mixed animal husbandry and diversified farming more suited to local terrains. This was accompanied by a widespread transformation of rural settlement. In contrast, the eastern Mediterranean experienced rural settlement expansion, intensification of land use, increased market-oriented agricultural production, and a significant change in oil and wine press technology. These changes seem to reflect the socio-political context in both east and west during this pivotal period.     

Punctuated Equilibrium in Limbo: The Tobacco Lobby and U.S. State Policymaking from 1990 to 2003

Since the mid-1980s, U.S. tobacco policy has been an intense and acrimonious issue between antitobacco advocates and the tobacco industry. In the United States, the tobacco industry has responded to heightened state antitobacco litigation, adverse public opinion, and public health advocacy by aggressively mobilizing against tobacco taxes and regulations. This article examines whether these tobacco policy trends can be generalized to punctuated equilibrium theory ideas that policy monopolies are stable over long periods and usually change because of sharp and short-term exogenous shocks to the policy system. From 1990 to 2003, there was a sharp mobilization by health advocates in all states and a significant rise in new legislation to control tobacco use. The tobacco industry, nevertheless, was able to generally keep state tobacco taxes low and counter significant regulatory threats to tobacco sales. From this, I conclude that the policy monopoly favoring the tobacco industry did not significantly change, despite the symbolic appearance of punctuation in the policy system.     

Governing the Bottle: Alcohol,Race and Class in Nineteenth-Century India

Following a series of aggressive military campaigns across India, by the early nineteenth century, the East India Company had secured a more definitive political space for itself in India. However, in taking over the administration of the diwani, or administration and revenue collection duties in Bengal, the Company gained responsibility for the taxes that governed the production and sale of alcohol and drugs—the abkari system. The abkari duties represented an opportunity and challenge for the colonial state. What followed changed the social landscape of India as the Company developed a series of regulations to govern alcohol in both military and civil space. These laws quickly moved beyond earlier Mughal dictates on alcohol, revealing the state’s intent to mould society through taxation.

This article frames these colonial taxes on alcohol as a tool of governmentality. It argues that the state utilised the abkari department not simply as a means of generating revenue, but as a means of managing social relations and economic life in nineteenth-century India. It explores the path that the colonial state sought to forge between arguing for the ‘moral uplift’ of drinking populations and securing reliable revenue for Company (and later Crown) coffers. The laws themselves were often race- (and class-) specific, suggesting, for example, the pre-disposition of certain peoples to particular drinks. Moreover, the drinks themselves, whether toddy or ‘European’-style distilled spirits, were assigned a racial identity. While European observers viewed toddy as ‘natural’ and even beneficial when drunk by poor Indian labourers, in the throats of European soldiers it was labelled ‘dangerous’ or even lethal. Conversely, later Indian campaigners warned that ‘alien’ distilled spirits, such as whisky or rum, were completely foreign to India and that their introduction suggested a darker, less benevolent, side to India’s colonial rule. As such, these colonial controls on alcohol, and the debates that swirled around them, illuminate the ways in which the colonial state both understood and attempted to shape its subjects and servants.     

Legal Dispossession: State Strategies and Selectivities in the Expansion of Indonesian Palm Oil and Agrofuel Production

This article examines the role of the state in the appropriation and control of land in Indonesian palm oil and agrofuel production. Drawing on political ecology and critical state and hegemony theory, it focuses particularly on the legal state strategies that support the hegemonic project of agro‐industrial and export‐oriented palm oil and agrofuel production. The article analyses the structural, strategic and spatial selectivities — the mechanisms of marginalization and privilege — that accompany the strategies the state employs. Three important strategies are discussed, namely the codification of land ownership, the concentration of land possession and the valorization of natural resources in the context of de‐ and recentralization. The article concludes that these legal state strategies represent an important means to organize and protect a large‐scale palm oil project as they succeed in universalizing dominant interests whilst at the same time (partially) integrating subaltern interests.     

Resources Versus Results: Comparative Performance of State Highway Systems, 1984–1990

This article compares the relative performance of the U.S. and the 50 state highway systems against resources available, over the period 1984–1990. Data are collected on 13 measures of revenues, expenditures, pavement condition, congestion, bridge condition, and accidents. Statistics are normalized to control the effects of size and inflation. Each state's performance is then graded according to whether the state is making progress, holding steady, or losing ground relative to the national trends. Findings show that the U.S. highway system is in good condition and is continuing to improve: even statistics on congestion are now beginning to show improvement. Against this general improvement six states have been able to maintain or improve their highway systems with considerably less resources per mile than other states. These states are New Mexico, South Dakota, Wyoming, Mississippi, South Carolina, and Arkansas. Each of these stales seems to have a combination of geography, traffic, economic structure, and fiscal capability that results in particularly cost-effective highway systems. The findings suggest that simplistic explanations of performance based on location, urban/rural distinctions, weather, climate, or taxes are inadequate; more research is needed to explain the causes of these differences.     

Russian Revenues from Oil and Gas Exports: Flow and Taxation

A senior Japanese economist traces the flows of revenue derived from oil and gas exports through the Russian economy. The author examines the use of revenues and investigates their contribution to Russia's state and regional budgets in the form of taxes. After detailing the methodological difficulties encountered in measuring revenue streams statistically, he proceeds to approximate their magnitude through intensive use of input-output table data and budget statistics provided by the Russian Federation Ministry of Finance. His investigation of the list of destination countries for Russian oil and petroleum products exports has interesting implications for the study of capital flight from Russia to the West. Journal of Economic Literature, Classification Numbers: F14, H20, Q43. 10 tables, 37 references.     

The man with the dirty black beard: race, class, and schools in the antebellum South

The problem of poor, degraded white people in the antebellum South presented a problem to both reformers and proponents of slavery. Sharpening the differences of race meant easing those of class, ensuring that public schooling did not always receive widespread support. The cult of white superiority absolved the state of responsibility for social mobility. As better schooling was advocated for religious and civic reasons, wealthy planters determined to avoid taxes joined with their illiterate neighbors in fighting attempts at “improvement” that undermined the slave system based on the notion of black inferiority.     

Political change in the Arab oil monarchies: from liberalization to enfranchisement

The oil monarchies of the Persian Gulf region have typically been portrayed as patriarchal autocracies characterized by traditional tribal rule that have taken on the characteristics of a modern state. The historical debate on these rentier states has centred on how their substantial oil income since the 1970s has allowed them to pacify their citizenry from making demands for enfranchisement. Power was thus firmly able to rest with the elites. Since the end of the Cold War, winds of change flamed the desire for reform and the late 1990s saw significant political changes. The empirical data indicates that this pace has increased, albeit at differential speeds, within the context of the post‐9/11 war on terror. Interestingly, this has been the case despite turmoil in Iraq and a shift to the right in Iranian politics. The fundamental drivers of reform in the Arab oil monarchies continue to be the ruling elites themselves, however. The character of the reforms does appear to be mainly liberalizing rather than democratizing, but developments in some oil monarchies suggest that this process can be viewed as an early or intermediate stage of a wider enfranchisement of civil society.     

EXTERNALITIES AND PARTIAL TAX REFORM: DOES IT MAKE SENSE TO TAX ROAD FREIGHT (BUT NOT PASSENGER) TRANSPORT?*

ABSTRACT Externalities such as pollution and road congestion are jointly produced by the use of intermediate inputs by firms and the consumption of final goods by households. To cope with such externalities, policy proposals often suggest partial tax reforms. This paper uses a simple general equilibrium model to explore the effects of a reform of taxes on freight transport in a second‐best setting. The theoretical model shows that the welfare effect of higher freight taxes is positive, unless passenger transport is severely under‐taxed and the tax reform attracts substantially more passenger transport. Moreover, the optimal freight tax may be below or above marginal external cost. Budgetary neutral tax reform exercises with a numerical simulation model for the U.K. suggest that, under a wide variety of parameter values, higher freight transport taxes are indeed welfare increasing. The welfare gain of freight tax reform rises with the level of the passenger tax, but the optimal freight tax declines at higher taxes on passenger transport. Substantial net benefits of tax reform are obtained only under labor tax recycling of the revenues.     

Settlement Patterns and Development of Social Complexity in the Yiluo Region,North China

Abstract

This international, collaborative, and interdisciplinary archaeological program examines changes in settlement patterns from the early Neolithic to the full development of states (ca. 6500–200 B.C.) in the Yiluo region of central north China. Full-coverage regional surveys are integrated with geoarchaeological investigations, ethnobotanical studies, and lithic analyses. The data are used to assess changes in population, environment, land use, agricultural production, and craft production, and to test theoretical propositions regarding the emergence and development of social complexity. Research results suggest a significant sociopolitical transformation taking place in the Yiluo basin during the Erlitou period, including the development of the first four-tiered settlement hierarchy, marked population nucleation, and economic integration between urban center and rural areas. These changes indicate the emergence of the earliest state in China.