Taxation and citizen choice: The effect of a county charter on property taxes

As saliency of the tax burden increases, the preference for a lower burden increases, but most counties are restricted by the state from adopting new taxes or changing the existing rates. Some states allow counties to adopt a charter, freeing them from state control. Using a panel of Florida counties from 1980 to 2017, we explore whether citizens act to reduce their property tax once a charter is passed. Citizens act against their preferences not by lowering burden but rather by increasing it in the case of debt service, suggesting citizens are maximizing their optimal tax burden in exchange for services.     

The incentive effects of property taxes on local governments

This paper applies the ideas of Brennan and Buchanan (1977, 1978, 1980) to local property taxes. When local governments maximize their revenues, property taxes provide incentives for adequate amenity provision. Local amenity provision determines property values which then determine local tax revenues. As long as the demand for housing is inelastic, property-taxes will provide stronger incentives for local governments than lump-sum taxes. As current property values reflect expectations about future amenity levels, property taxes create incentives for even the most myopic government to invest for the future. Local property taxes can also act to limit the incentives of localities to tax; there are cases where higher levels of local property taxes lead to lower overall tax burdens. These ideas are applied to the tax reform in the late 1970s; one reason that tax reform may have been so successful is that in a period where land prices are driven by many forces other than government amenities, property taxes lose their value as incentive devices.     

The political economics of not paying taxes

This paper considers redistributive as well as political consequences of tax avoidance. When tax avoidance is possible, the official tax rate does not necessarily correspond to what individuals actually pay. This affects both redistributive outcomes as well as political attitudes towards taxation. Depending on the avoidance technology different political equilibria emerge. When the avoidance possibilities are limited, the classical conflict between rich and poor is sustained. If the tax avoidance technology is more effective, however, the equilibrium outcome can change to a situation where a coalition of poor and the very richest favor a higher tax rate. Comparing the model predictions with data on income inequality and evidence of avoidance activity, it comes surprisingly close to actual observations.     

The political economy of sales taxes and sales tax exemptions

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.

     

The political economy of smoking regulation and taxation

Although anti-smoking policies are on the political agenda in almost all developed countries, a general understanding of these policies is still lacking. Applying the majority voting model of Buchanan and Vanberg (Public Choice 57(2):101–113, 1988) to tobacco taxation and smoking regulation shows that different smoking policies are feasible, depending on the composition of the majority of voters with smokers and non-smokers: (1) internalization of spill-over costs with a mixed majority of smokers and non-smokers as well as (2) a combination of regulation and taxation with a non-smoker majority. Moreover, the influence of the tobacco industry is also discussed.     

The broken bridge of public finance: majority rule,earmarked taxes and social engineering

Public Choice - A theoretically grounded approach to causal questions illuminates both the utility and limitations of the potential outcomes (PO) framework as a model for historically-focused,...     

Institutional features of congressional decisions: The fight to prohibit smoking on airlines

A pervasive theme of the congressional politics literature is that the committee system is fundamental in determining the policy status quo. Such an assertion hinges crucially upon committees controlling their jurisdictions; congressional delegation is undermined if a committee can assert authority over any issue domain at any time. Yet, representatives may possess an incentive to support a policy proposal that would change the status quo, even if it entails disregarding procedures. Indeed, standard conceptualizations of how members of Congress make their voting choices assume that only the benefits and costs associated with a policy matter, and they do not consider institutional factors such as whether a bill emerged from the correct committee.This analysis examines whether representatives will sacrifice policy interests to preserve institutional features of the legislature. The effort in 1987 to curb smoking on airplanes — which became embroiled in a difficult-to-resolve jurisdictional dispute — serves as a vehicle to analyze how sensitive members are to such features. The results demonstrate that a sizable number put aside their [generally moderate] policy preferences and voted against limits on smoking for institutional reasons. These findings have important implications both for specifying the determinants of policy change and for understanding institutional stability.     

The effect of health on retirement

Results from retirement research suggest the following conclusions about health, retirement, and the likely effects of the changes in retirement age made by the 1983 Social Security Amendments. First, after controlling for non-health-related factors, it is clear that older workers who are in poor health retire earlier than workers with similar economic circumstances who are in good health. Second, the research reviewed here tends to indicate that the response of the average worker to the changes made in the social security full retirement age by the 1983 amendments will be small. Estimates suggest than the average increase in the retirement age will be between zero and 3 months. Finally, while the evidence is much less certain, research results suggest that older workers in poor health may respond even less than the average worker. It is not possible to say precisely what will happen to lifetime incomes as a result of these changes. A small labor supply response suggests that not much of the lost social security benefits will be made up by additional earnings, either for workers on average or for workers in poor health. However, earnings are only part of the total income picture. Other than a brief mention, this article has not addressed how workers may adjust their savings behavior, or how private pensions may adjust, and particularly whether the potential for adjustment through these avenues is the same for workers in poor health as for the average worker.     

Medicaid costs and birth outcomes: the effects of prenatal WIC participation and the use of prenatal care.

This study examines the effects of prenatal WIC participation and the use of prenatal care on Medicaid costs and birth outcomes in five states--Florida, Minnesota, North Carolina, South Carolina, and Texas. The study period is 1987 for Florida, Minnesota, North Carolina, and South Carolina and January-June 1988 for Texas. Prenatal WIC participation was associated with substantial savings in Medicaid costs during the first 60 days after birth, with estimates ranging from $277 in Minnesota to $598 in North Carolina. For every dollar spent on the prenatal WIC program, the associated savings in Medicaid costs during the first 60 days ranged from $1.77 to $3.13 across the five states. Receiving inadequate levels of prenatal care was associated with increases in Medicaid costs ranging from $210 in Florida to $1,184 in Minnesota. Prenatal WIC participation was associated with higher newborn birthweight, while receiving inadequate prenatal care was associated with lower birthweight.     

On the distribution of federal taxes and expenditures,and the new war between the states

As federal government expenditures have grown, there has been an increasing awareness of the distribution of taxes and expenditures across states. States in the Northeast have claimed that sunbelt states have been getting more than their fair share of federal spending, with the sunbelt states denying the charge. A theory of political coalitions is developed to explain why the sunbelt should be unable to receive differentially high expenditures, although the sunbelt may pay less than a proportional amount in taxes because of its relatively low income. An empirical test shows that the data are in agreement with this theory.     

State legislation on smoking and health: A comparison of two policies

The two principal smoking-related state legislative activities stand in sharp contrast to one another. Cigarette excise taxation diffused among the states well before the connection between smoking and illness became a public issue, yet more recent tax increases appear to reflect a response to the national anti-smoking campaign. The growing disparity in cigarette prices between tobacco and other states has created a lucrative market in bootlegged cigarettes and has thereby brought new taxation to a virtual standstill for six years. Laws restricting smoking in public places represent a phenomenon of the 1970's clearly bearing the imprint of the anti-smoking campaign. From 1972 through 1978, the number of states with such laws in effect grew from 5 to 36, and the restrictiveness of the laws also increased. The dramatic correlation between diffusion of the laws and decreases in cigarette consumption rates seems best interpreted as each of these reflecting changes in social attitudes toward smoking.     

The changing association between prenatal participation in WIC and birth outcomes in New York City.

We analyze the relationship between prenatal WIC participation and birth outcomes in New York City from 1988-2001. The analysis is unique for several reasons. First, we have over 800,000 births to women on Medicaid, the largest sample ever used to analyze prenatal participation in WIC. Second, we focus on measures of fetal growth distinct from preterm birth, since there is little clinical support for a link between nutritional supplementation and premature delivery. Third, we restrict the primary analysis to women on Medicaid who have no previous live births and who initiate prenatal care within the first four months of pregnancy. Our goal is to lessen heterogeneity between WIC and non-WIC participants by limiting the sample to highly motivated women who have no experience with WIC from a previous pregnancy. Fourth, we analyze a large sub-sample of twin deliveries. Multifetal pregnancies increase the risk of anemia and fetal growth retardation and thus may benefit more than singletons from nutritional supplementation. We find no relationship between prenatal WIC participation and measures of fetal growth among singletons. We find a modest pattern of association between WIC and fetal growth among U.S.-born Black twins. Our findings suggest that prenatal participation in WIC has had a minimal effect on adverse birth outcomes in New York City.     

The effect of monetary unification on public debt and its real return

We explore the implications of monetary unification for real interest rates and (relative) public debt levels. The adoption of a common monetary policy renders the risk-return characteristics of the participating countries’ public debt more similar. The implied reduction in the scope for risk diversification raises the average expected real return on the debt. Also, the share of the union-wide debt issued by relatively myopic governments or of countries that initially have a relatively dependent central bank increases after unification. This may put the political sustainability of the union under pressure. A transfer scheme that penalizes debt increases beyond the union average is able to undo the interest rate effect of unification, but magnifies the spread in relative debt levels.     

The effect of bicycle helmet legislation on bicycling fatalities

A number of states passed legislation in the 1990s requiring youths to wear helmets when riding bicycles. The effect of this legislation on bicycling fatalities is examined by subjecting data from the Fatality Analysis Reporting System to a panel analysis, using a control‐group methodology. A helmet law reduces fatalities by about 15 percent in the long run, less in the short run. There is no evidence of spillover effects (to adults) or substitution effects (youths choosing other methods of transportation) associated with implementation of a helmet law. Through 2000, existing helmet laws have saved 130 lives. If all states had adopted helmet laws in 1975, more than 1500 lives would have been saved. © 2004 by the Association for Public Policy Analysis and Management.     

The effect of disabilities on exits from AFDC.

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 replaces AFDC, the largest means-tested cast assistance program for low-income families, with the Temporary Assistance for Needy Families (TANF) block grant. Unlike AFDC, assistance under TANF is limited to five years in a lifetime, and states are required to move families from the assistance rolls into jobs. But not all adult welfare recipients can easily move to work because either they themselves are disabled or they have a child with disabilities requiring special care. This article examines the extent and impact of disability among families on AFDC to gain insight into the potential impact of changes under TANF. Using data from the 1990 Survey of Income and Program Participation (SIPP), we find that in nearly 30 percent of the families on AFDC either the mother or child has a disability. Furthermore, we find that having a disability significantly lowers the probability that a woman leaves AFDC for work but not for other reasons, such as a change in living arrangements. Finally, we find little evidence that having a child with a disability affects the probability of leaving AFDC for any reason.