Public Choice

, Volume 171, Issue 1–2, pp 207–221 | Cite as

The political economy of sales taxes and sales tax exemptions

Article
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Abstract

I analyze the choice politicians face when seeking votes from groups that lobby for sales tax rate decreases or tax exemptions, given the constraint that politicians want to raise a certain amount of revenue. Using data on sales taxes, I develop a model predicting a positive relationship between the number of exemptions and the sales tax rate. The estimation results provide support for this prediction. Each additional exemption is associated with an increase of between 0.10 and 0.25 percentage points in the tax rate.

Keywords

Sales taxes Tax exemptions State politics Interest groups 

Notes

Acknowledgements

This paper is based on a my co-authored working paper with (Militaru and Stratmann 2014).

Supplementary material

11127_2017_434_MOESM1_ESM.docx (32 kb)
Supplementary material 1 (DOCX 31 kb)

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.George Mason UniversityFairfaxUSA

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