Not That There’s Anything Wrong with That: The Effect of Personalized Appeals on Marriage Equality Campaigns

An increasingly predominant strategy used by organizations seeking to increase support for gay marriage is to personalize the issue by focusing on individuals in the LGBT community. However, competing theoretical traditions (e.g., Allport??s contact theory, group threat, implicit bias) raise questions about whether this strategy has the desired effect. This paper presents results from an original field experiment conducted in coordination with a marriage equality organization. Callers who self-identified as a member of the LGBT community were less effective in soliciting donations compared to callers who did not self-identify, suggesting that personalization has a negative effect on persuasion efforts. The findings cut against the grain of the Allport (The nature of prejudice, 1954) hypothesis and have important implications for social advocacy organizations in terms of rhetorical and message strategy.     

Austerity and niche parties: The electoral consequences of fiscal reforms

Austerity policies — policies of sharp reductions of a government's budget deficint involving spending cuts and tax increases — are claimed to boost support for radical political parties. We argue, counter to popular claims, that austerity measures actually reduce support for radical and niche parties. Austerity policies force traditional left-right politics to the forefront of political debate with the traditional mainstream parties having a stronger ownership over those issues. We systematically explore the impact of austerity measures on the electoral fortunes of niche parties in 16 developed countries over a 35-year period, while controlling for a number of socio-economic variables. We find that austerity policies that rely on tax increases affect radical parties on the left and the right in different ways than fiscal adjustments based on spending cuts.     

Is There an Association Between Gasoline Prices and Physical Activity? Evidence from American Time Use Data

Obesity is epidemic in the United States, and there is an imperative need to identify policy tools that may help fight this epidemic. A recent paper in the economics literature finds an inverse relationship between gasoline prices and obesity risk—suggesting that increased gasoline prices via higher gasoline taxes may have the effect of reducing obesity prevalence. This study builds upon that paper. It utilizes cross‐sectional time series data from the American Time Use Survey (ATUS) over 2003–2008, utilizes the increases that occurred in gasoline prices in this period due to Hurricane Katrina and to the global spike in gasoline prices as a “natural experiment,” and explores how time spent by Americans on different forms of physical activity is associated with gasoline price levels. Economic theory suggests that higher gasoline prices may alter individual behavior both via a “substitution effect” whereby people seek alternatives to motorized transportation, and an “income effect” whereby the effect of higher gasoline prices on the disposable family budget leads people to make various adjustments to what they spend money on. The latter may lead to some increase in physical activity (for example, doing one's own yard work instead of hiring help), but may also lead to decreases in other physical activities that involve expenses, such as team sports or workouts at the gym. Thus, ultimately, the relationship between gasoline prices and physical activity must be empirically determined. Results from multivariate regression models with state and time fixed effects indicate that higher gasoline prices are associated with an overall increase of physical activity that is at least moderately energy intensive. The increases are most pronounced in periods where gasoline prices fluctuate more sharply and unexpectedly. These results appear robust to a number of model specifications. One of the major components of this increase appears to be an increase in housework that is at least moderately energy intensive—such as interior and exterior cleaning, garden, and yard work. This tentatively suggests that there is an income effect of higher gasoline prices, or a possible increase in prices of such services when gasoline prices increase. However, the increases in physical activity associated with increased gasoline prices are weaker among minorities and low socioeconomic status (SES) individuals. Hence, while a policy that increases gasoline prices via raised gasoline taxes may have benefits in terms of increasing overall physical activity levels in the United States, these benefits may not accrue to low SES individuals to the same extent as to their higher SES counterparts. This suggests that if increasing physical activity is the primary goal, then it may be more efficient to use a tax that can exert an income effect on mid‐to‐high SES households, such as a targeted income tax. On the other hand, if gasoline taxes are imposed to address other negative externalities of gasoline use, then these taxes may have the added benefit of increasing physical activity at least among some segments of U.S. society.     

Requisites of radical reform: Income maintenance versus tax preferences

Why did tax reform succeed in gaining passage while the family assistance plan failed? Using cultural theory, we argue that the active consent of elites from three political cultures is required before radical policy proposals will win political support in America. Although the Nixon administration cast the income maintenance plan in integrative terms—support for the family—it failed because egalitarian leaders demanded more. Tax reform succeeded because elites of the three cultures—individualists, egalitarians, and supporters of hierarchy—saw benefits in the plan and were willing to compromise.     

Not Just Another Determinants Piece: Path Dependency and Local Tax Abatements

Although there is a large body of research attempting to identify the correlates of tax abatements, the question of why cities abate taxes at widely differing rates—or indeed, not at all despite state enabling legislation allowing them—has never been completely answered. Based on an examination of tax abatement data representing the history of abatements in Michigan, the article concludes that abatement patterns can be best understood when past abatement behaviors and the nature of the local employment base are included in the analysis. In the case of the number of abatements granted, it appears that both these forces—along with the general economy, governmental structural and process factors—are important in understanding abatement behavior. When the total value of abatements is considered, industrial mix appears most critical. Once municipalities start giving tax abatements they continue to do so. And, having concentrations of transportation‐related industries and food/consumer products are traits that appear to lead to that initial push for abatements.     

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.

     

Fighting fiscal corruption: lessons from the Tanzania Revenue Authority

Over the last decade, several African countries have undertaken comprehensive reforms of their tax administrations to increase revenue and curb corruption. This article examines recent experiences in the fight against corruption in the Tanzania Revenue Authority (TRA). Two lessons of broader relevance are highlighted. Firstly, even with relatively high wages and good working conditions, corruption may continue to thrive. In a situation where there is high demand for corrupt services, it is unrealistic to provide tax officers with pay rates that can compensate for the amount gained through bribery. Without extensive and effective monitoring, wage increases may produce not only a highly paid, but also a highly corrupt tax administration. Secondly, hiring and firing procedures may lead to more corruption. Corrupt tax officers often operate in networks, which also include external actors. These corruption networks seem to have been strengthened because many of those fired were recruited to the private sector as ‘tax experts’. This partly explains why the positive process experienced in the initial phase of the new revenue authority was later reversed. Copyright © 2003 John Wiley & Sons, Ltd.     

Performance Federalism and Local Democracy: Theory and Evidence from School Tax Referenda

Federal governments are increasingly employing empirical measures of lower‐level government performance to ensure that provincial and local jurisdictions pursue national policy goals. We call this burgeoning phenomenon “performance federalism” and argue that it can distort democratic accountability in lower‐level elections. We estimate the impact of a widely publicized federal indicator of local school district performance—one that we show does not allow voters to draw valid inferences about the quality of local educational institutions—on voter support for school tax levies in a U.S. state uniquely appropriate for this analysis. The results indicate that a signal of poor district performance increases the probability of levy failure, a substantively large and robust effect that disproportionately affects impoverished communities. The analysis employs a number of identification strategies and tests for multiple behavioral mechanisms to support the causal interpretation of these findings.     

Interaction between federal taxation and horizontal tax competition: theory and evidence from Canada

The aim of this paper is to determine to what extent and how federal taxes affect local tax decisions. Testing the impact of an increase in the federal tax on horizontal tax competition with Canada-US data for 1984–1994, it finds evidence that an increase in federal tax makes horizontal tax reactions weaker. This is because an increase in federal tax raises the cost, in terms of utility of income, of a unit increase in the province’s tax rate. On the methodological side, it is possible to estimate the impact of the federal tax on the fiscal policy of the province without neglecting control for year effects, which cannot be used in the empirical literature because they are perfectly collinear with the federal tax.     

Budgeting Rules and Program Outcomes

It is not efficient for a budget system either to enable excessively frequent changes in programs and tax policies or to be rigid and unresponsive. Program durability is one measure of how a budget system weighs the competing goals of resoluteness and responsiveness. The federal budget has different processes—mandatory and discretionary spending and tax expenditures—each based in separate congressional committees and relying on separate procedures. This article examines the budget systems' durability. One finding is that mandatory spending programs and tax expenditures are more durable than programs backed by discretionary spending. However, while programs targeted to vulnerable populations and supporting long‐term planning, such as in income support and health, might benefit from durability, these programs display shorter durability, not longer. While displaying greater durability, tax expenditures do respond to changes in different economic sectors, based on the changes in spending of other budget systems.     

Mayoral Public Sector Work Experience and Tax Collection Performance in Colombian Local Governments

ABSTRACT

Local governments in Latin America tend to have limited capacity to collect taxes. Existing theory explains tax collection performance as a function of political, socio-economic, and cultural factors. Yet across Latin America, tax collection performance varies greatly between localities that are similar along these dimensions. We suggest that organizational capacity, represented by managers' human capital, explains variation in local tax collection performance. We test this theoretical idea against panel data on most Colombian local governments, where elected mayors are the top managers determining the local tax collection strategy. We examine two indicators of tax collection performance: (1) the per-capita amount of property tax collected and (2) property tax collected as a percentage of total property valuation. Controlling for important confounders, the length of the mayor's prior public sector work experience is positively associated with the per-capita amount of property tax collected but not the percentage of total property valuation collected in property tax. Our results suggest that Colombian mayors gain relevant skills over their career. Our study has implications for other developing countries with a similar property tax collection system.     

Do State‐Funded Property Tax Exemptions Increase Local Government Inefficiency? An Analysis of New York State's STAR Program

This study tests the effects of a growing form of indirect state aid—state‐supported property tax exemptions—on local government efficiency. We hypothesize that larger exemptions, by lowering the effective tax price paid by local homeowners and thus their incentive to monitor efficiency, will reduce local government efficiency. We test this hypothesis by examining the introduction of New York State's large state‐subsidized property tax exemption program, which began in 1999. We find evidence that, all else constant, the exemptions have reduced efficiency in districts with larger exemptions, but the effects appear to diminish as taxpayers become accustomed to the exemptions.     

Taxation by Citation? Exploring Local Governments’ Revenue Motive for Traffic Fines

Anecdotal evidence suggests that local governments may have a revenue motive for traffic fines, beyond public safety concerns. Using California's county-level data over a 12-year period, this article shows that counties increased per capita traffic fines by 40 to 42 cents immediately after a 10 percentage point tax revenue loss in the previous year; however, these counties did not reduce traffic fines if they experienced a tax revenue increase in the previous year. This finding indicates that county governments probably view traffic fines as a revenue source to offset tax revenue loss, but not as a revenue stabilizer to manage revenue fluctuation. This article also finds that low-income and Hispanic-majority counties raised more traffic fines. Counties that generated more revenue from the hotel tax—a tax typically paid by travelers and visitors—raised more traffic fines, indicating a possible tax-exporting behavior by shifting the traffic fine burden to nonlocal drivers.     

CORPORATE TAX CUTS AND FOREIGN DIRECT INVESTMENT

Accurate policy evaluation is central to optimal policymaking, but difficult to achieve. Most often, analysts have to work with observational data and cannot directly observe the counterfactual of a policy to assess its effect accurately. In this paper, we craft a quasi‐experimental design and apply two relatively new methods—the difference‐in‐differences estimation and the synthetic controls method—to the policy debate on whether corporate tax cuts increase foreign direct investment (FDI). The taxation–FDI relationship has attracted wide attention because of mixed findings. We exploit a quasi‐experimental design for Russian regions, which were granted autonomy to reduce corporate profit tax in 2003, enabling them to simultaneously experiment with different tax policies. We estimate both the average and local treatment effects of two types of tax cuts on FDI inflows. We find that, on average, relative to the absence of tax cuts, nondiscriminatory tax cuts on direct investment profit increase FDI, but discriminatory tax cuts on selected government‐sanctioned investment projects do not. Yet for both types of tax cuts, local treatment effects vary dramatically from region to region. Our research has important implications for the design of tax policy and fiscal incentive, and the assessment of fiscal policy reforms.     

The Humean Critique of Lump Sum Taxation (or the Implausibility of Pure Lump Sum Taxes in Autocracy)

This paper revives Hume's idea that it is unlikely forsovereign governments to implement pure lump-sum taxationbecause lump-sum taxes are arbitrary. We phrase the problem asone of time-inconsistency of tax collection for a tax revenuemaximizing Leviathan government. We demonstrate that whilelump-sum taxation is more efficient than distortionary incometax in terms of the ex ante amount of tax revenueraised, honoring a lump-sum tax is less likely to be crediblethan honoring a distortionary income tax. We also extend theframework to understanding the relationship betweenexpropriation risk and the lack of foreign direct investment.     

Fiscal decentralization and the size of government: a European country empirical analysis

This article is an original contribution to the understanding of the relationship between fiscal decentralization and government size. Using a panel data set of the EU-15 countries, we analyse the effect of decentralization on aggregate, national and subnational government sizes by separating the long run effects of decentralization from its short run dynamics. In the long run, tax autonomy reduces central expenditure but increases—and to a greater extent—subnational public expenditure, leading to higher aggregate public expenditure. We find also that vertical imbalances tend to increase the sizes of subnational, national and aggregate governments.     

The Politics and economics of revenue growth: A cross–national analysis

Despite considerable interest in comparative fiscal policy in general, and the high salience of tax policy and tax reform in the industrialized democracies, there are relatively few cross–national studies of the economic and political correlates of revenues over time. We undertake a cross–national time series study of revenue growth in fourteen OECD countries between 1958 and 1990.We test a number of political and economic hypotheses about revenue change, including political business cycle, 'fiscal illusion', elasticity, and ideological theories. For the 1958—1990 period, we find that all countries, regardless of revenue structure, experience higher real revenue growth as a result of inflation, but that revenue growth is more responsive to unemployment in countries that rely more on direct taxes compared to countries with less direct–tax reliance. We find that this effect is most pronounced in the post–1972 period. We also find that revenue tends to increase in the years following elections, consistent with the idea that governments try to minimize the political fallout from tax increases by separating them as much as possible from election campaign periods; this effect, too, is most pronounced in the post–1972 period. We find no support for 'fiscal illusion' and ideological theories of revenue growth.     

The politics and economics of revenue growth: A cross-national analysis

Abstract Despite considerable interest in comparative fiscal policy in general, and the high salience of tax policy and tax reform in the industrialized democracies, there are relatively few cross–national studies of the economic and political correlates of revenues over time. We undertake a cross–national time series study of revenue growth in fourteen OECD countries between 1958 and 1990.We test a number of political and economic hypotheses about revenue change, including political business cycle, 'fiscal illusion', elasticity, and ideological theories. For the 1958—1990 period, we find that all countries, regardless of revenue structure, experience higher real revenue growth as a result of inflation, but that revenue growth is more responsive to unemployment in countries that rely more on direct taxes compared to countries with less direct–tax reliance. We find that this effect is most pronounced in the post–1972 period. We also find that revenue tends to increase in the years following elections, consistent with the idea that governments try to minimize the political fallout from tax increases by separating them as much as possible from election campaign periods; this effect, too, is most pronounced in the post–1972 period. We find no support for 'fiscal illusion' and ideological theories of revenue growth.     

How Pollution Taxes may Increase Pollution and Reduce Net Revenues

This paper develops a positive theory of pollution taxation by a federal authority when pollution abatement subsidies are used by local governments. Environmental and industry lobby groups influence governments with campaign contributions. First, pollution may increase in the pollution tax because the abatement subsidy increases (decreases) with the tax, and pollution increases (decreases) in the abatement subsidy. This occurs because the lobbying incentives change at a pollution tax reform. Second, pollution taxes may reduce net revenues because subsidy expenditures rise. Third, pollution may increase simultaneously as net revenues fall. Finally, the welfare effect of a pollution tax may be negative.     

Taxes,Time, and Support for Security

New technologies have been developed in response to terrorism. These present problems for local officials: implementing technologies will be expensive, and no technologies exist that can be used to gauge demand. We apply contingent valuation methodologies to determine support for additional taxes to pay for new terrorism‐related technologies and services. We present findings from a national survey about people's attitudes toward terrorism prevention and response. We find that respondents generally support new services and technologies and local tax increases to pay for them. We also find that respondents are willing to pay more if programs have everyday uses that would enhance public safety, but are less supportive as inconveniences increase.