SlideShare a Scribd company logo
PROPERTY, INCOME, AND SALES TAX
PERFORMANCE THROUGH ECONOMIC
FLUCTUATIONS
John E. Anderson
University of Nebraska-Lincoln
and
Lincoln Institute of Land Policy
Riding
the state
and local
revenue
roller
coaster
New Estimates of State and Local Tax Resilience
• Estimate relationship between changes in state GDP and changes in state
and local tax revenue
• Property, income, and sales tax data
• Property tax data: 1967-2012
• Income and sales tax data: 1972-2012
• Estimate two relationships:
• Long-run buoyance: change in revenue in response to change in state GDP
• Error correction: response following a GDP shock, returning to long-run equilibrium
Two Measures of Resilience
• Buoyance measures the long-run relationship between changes in state GDP
and changes in tax revenue
• No adjustments for policy offsets (i.e. tax rate or base changes)
• A buoyancy estimate of 1.0 indicates that a one percent change in GDP results in a one
percent change in tax revenue
• An estimate less than 1.0 indicates a less than proportionate change in tax revenue
• An estimate more than 1.0 indicates a more than proportionate change in tax revenue
• Error correction term measures how a tax system responds to a GDP shock
as it adjusts to its long-run equilibrium
• A negative sign indicates that a positive error in the previous year (revenues above trend) is
followed by a negative adjustment in the following year
Tax Buoyancy and Error Correction Estimates, Overall
Estimates for the 50 States and D.C.
Property Tax Income Tax Sales Tax
Long-run buoyancy 0.78 1.06 0.90
Error correction -0.75 -0.21 -0.81
• The property tax is the most stable revenue source with a long-run buoyancy estimate less than
one; followed by the sales tax which is more buoyant
• The income tax is the least stable revenue source, reacting more than proportionately to state
GDP shocks
• In terms of error correction, adjusting to shocks that displace states from their long-run equilibrium,
the sales and property tax systems adjust more quickly, while income tax systems adjust much
more slowly
Long-Run Tax Buoyancy—New England States
Property Tax Income Tax Sales Tax
Connecticut 0.82*** 4.63*** 0.52***
Maine 0.53 0.68 0.83***
Massachusetts -1.57 1.17*** 0.78***
New Hampshire 0.86***
Rhode Island -0.31 1.09** 0.83***
Vermont 1.02*** 1.17*** 1.02***
***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels
Long-Run Tax Buoyancy—New England States
• Property tax:
• CT, NH and VT have property tax buoyancy in the range of 0.8 to 1.0, somewhat less than
proportional responses to changes in state GDP
• ME, MA, and RI have no buoyancy, i.e. fluctuations in state GDP have little or no impact on
property tax revenues
• Income tax:
• CT has an extremely volatile income tax system (4.6)
• MA, RI, and VT have buoyancy estimates that are greater than one indicating more than
proportional responses to changes in state GDP (1.1 to 1.2)
• Sales tax:
• VT has unitary buoyancy (1.0)
• ME, MA, and RI have buoyancy of about 0.8, indicating less than proportional response
• CT has a less response sales tax system (0.5)
Error Correction Terms—New England States
Property Tax Income Tax Sales Tax
Connecticut -0.11 -0.37*** -0.76***
Maine -1.14*** -0.07 -0.83***
Massachusetts -1.11*** -0.38*** -1.03***
New Hampshire -0.98***
Rhode Island -1.12*** -0.13 -1.22***
Vermont -0.76*** -0.62*** -0.90***
***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels
Error Correction Terms—New England States
• Property tax:
• Error correction terms are strongest for property tax systems
• For all New England states, except CT, the error correction terms are in the range of 1.0 to
1.1, indicating quick recovery after a GDP shock
• Income tax:
• Error correction terms for CT, MA, and VT are much smaller, in the range of 0.3 to 0.6,
indicating slow corrections after GDP shocks
• ME and RI terms are essentially zero, indicating little to no correction after a shock
• Sales tax:
• Error correction terms are in the range of 0.8 to 1.2 indicating relatively strong corrections
after GDP shocks
• RI has the strongest correction process
Policy Implications
• Volatility through the business cycle depends on the state and local portfolio of
revenue sources
• Reliance on property tax revenue produces relative stability and resilience
• Reliance on income taxes produces greater volatility and slower recovery
resilience to shocks
• Reliance on sales tax revenue also produces relative stability and resilience
• Individual state performance depends on the portfolio of revenue sources
State and Local Tax Revenue Shares (%)
New England States, 2013
Property Tax (%) Income Tax (%) Sales Tax (%)
Connecticut 40 32 28
Maine 43 26 31
Massachusetts 40 27 33
New Hampshire 77 2 21
Rhode Island 48 21 31
Vermont 47 21 32
Conclusions
• State revenue source portfolios have a direct impact on the buoyancy and
resilience of state tax systems
• Evidence indicates that states more heavily reliant on property and sales taxes experience
more stable revenue streams and faster error corrections following GDP shocks
• Evidence also shows that states more heavily reliant on income taxes experience less
stable revenue streams and have slow error correction processes
• If the policy objective is to have a stable revenue stream and a resilient tax
system, this evidence points toward greater reliance on property and sales
taxes
Optional Middle Atlantic slides for comparison
State and Local Tax Revenue Shares
Middle Atlantic States, 2013
Property Tax Income Tax Sales Tax
New Jersey 52 24 24
New York 36 36 28
Pennsylvania 34 30 36
Long-Run Tax Buoyancy—Middle Atlantic States
Property Tax Income Tax Sales Tax
New Jersey -0.51 1.57 0.73***
New York 1.13*** 1.39*** 0.73***
Pennsylvania -0.01 1.25*** 0.95***
***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels
Error Correction Terms—Middle Atlantic States
Property Tax Income Tax Sales Tax
New Jersey -1.10*** -0.19*** -0.80***
New York -0.10 -0.57*** -0.92***
Pennsylvania -1.09*** -0.68*** -0.87***
***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels
Property, Income and Sales Tax Performance Through Economic Fluctuations

More Related Content

What's hot

Convertibility of Black money to white
Convertibility of Black money to whiteConvertibility of Black money to white
Convertibility of Black money to white
Arpit Agarwal
 

What's hot (20)

Public Sector in Rural Oregon
Public Sector in Rural OregonPublic Sector in Rural Oregon
Public Sector in Rural Oregon
 
Oregon Economic and Revenue Forecast, September 2019
Oregon Economic and Revenue Forecast, September 2019Oregon Economic and Revenue Forecast, September 2019
Oregon Economic and Revenue Forecast, September 2019
 
The Way We Tax: Utah's State and Local Tax System
The Way We Tax: Utah's State and Local Tax SystemThe Way We Tax: Utah's State and Local Tax System
The Way We Tax: Utah's State and Local Tax System
 
VivekBajaj Advocate Ludhiana Tax structure unchanged by vat
VivekBajaj Advocate Ludhiana Tax structure unchanged by vatVivekBajaj Advocate Ludhiana Tax structure unchanged by vat
VivekBajaj Advocate Ludhiana Tax structure unchanged by vat
 
Don't Blame The Appraisal District
Don't Blame The Appraisal DistrictDon't Blame The Appraisal District
Don't Blame The Appraisal District
 
Convertibility of Black money to white
Convertibility of Black money to whiteConvertibility of Black money to white
Convertibility of Black money to white
 
Oregon Economic and Revenue Forecast, September 2020
Oregon Economic and Revenue Forecast, September 2020Oregon Economic and Revenue Forecast, September 2020
Oregon Economic and Revenue Forecast, September 2020
 
Oregon Economic and Revenue Forecast, June 2018
Oregon Economic and Revenue Forecast, June 2018Oregon Economic and Revenue Forecast, June 2018
Oregon Economic and Revenue Forecast, June 2018
 
Tax Cuts and Jobs Act
Tax Cuts and Jobs ActTax Cuts and Jobs Act
Tax Cuts and Jobs Act
 
Oregon Economic and Revenue Forecast, December 2021
Oregon Economic and Revenue Forecast, December 2021Oregon Economic and Revenue Forecast, December 2021
Oregon Economic and Revenue Forecast, December 2021
 
Income Tax Update - 2011
Income Tax Update - 2011Income Tax Update - 2011
Income Tax Update - 2011
 
Fiscal Policy
Fiscal PolicyFiscal Policy
Fiscal Policy
 
TPC Estimates of Candidates’ Tax Proposals
TPC Estimates of Candidates’ Tax ProposalsTPC Estimates of Candidates’ Tax Proposals
TPC Estimates of Candidates’ Tax Proposals
 
Oregon Economic and Revenue Forecast, June 2020
Oregon Economic and Revenue Forecast, June 2020Oregon Economic and Revenue Forecast, June 2020
Oregon Economic and Revenue Forecast, June 2020
 
Oregon Economic and Revenue Forecast, March 2022
Oregon Economic and Revenue Forecast, March 2022Oregon Economic and Revenue Forecast, March 2022
Oregon Economic and Revenue Forecast, March 2022
 
Where's the Money? State and Local Government Finance Forecast - Outlook 2015
Where's the Money? State and Local Government Finance Forecast - Outlook 2015Where's the Money? State and Local Government Finance Forecast - Outlook 2015
Where's the Money? State and Local Government Finance Forecast - Outlook 2015
 
Oregon Economic and Revenue Forecast, December 2019
Oregon Economic and Revenue Forecast, December 2019Oregon Economic and Revenue Forecast, December 2019
Oregon Economic and Revenue Forecast, December 2019
 
Cenvat Credit Rules, 2004
Cenvat Credit Rules, 2004Cenvat Credit Rules, 2004
Cenvat Credit Rules, 2004
 
There is a better way (9.18.2017)
There is a better way (9.18.2017)There is a better way (9.18.2017)
There is a better way (9.18.2017)
 
Economic survey 2017-18
Economic survey 2017-18Economic survey 2017-18
Economic survey 2017-18
 

Viewers also liked

La unión europea
La unión europeaLa unión europea
La unión europea
Vimagama
 
Untitled Presentation
Untitled PresentationUntitled Presentation
Untitled Presentation
Just4Form
 
ใบงานสำรวจตนเอง
ใบงานสำรวจตนเองใบงานสำรวจตนเอง
ใบงานสำรวจตนเอง
Kritat Kantiya
 
UPDATED RESUME - SALES - J BELLINI
UPDATED RESUME - SALES - J BELLINIUPDATED RESUME - SALES - J BELLINI
UPDATED RESUME - SALES - J BELLINI
JOSEPH BELLINI
 
Eval question edited
Eval question editedEval question edited
Eval question edited
Max Robson
 
Margaritas poéticas
Margaritas poéticasMargaritas poéticas
Margaritas poéticas
patriruru
 
Cómo leer mejor en voz alta. Tres puntos
Cómo leer mejor en voz alta. Tres  puntos Cómo leer mejor en voz alta. Tres  puntos
Cómo leer mejor en voz alta. Tres puntos
Yajaira Madeliin
 

Viewers also liked (20)

La unión europea
La unión europeaLa unión europea
La unión europea
 
Page 1 anchor SWACH 15 APRIL
Page 1 anchor SWACH 15 APRILPage 1 anchor SWACH 15 APRIL
Page 1 anchor SWACH 15 APRIL
 
Intolap
IntolapIntolap
Intolap
 
SCHOOL 20 MARCH
SCHOOL 20 MARCHSCHOOL 20 MARCH
SCHOOL 20 MARCH
 
Untitled Presentation
Untitled PresentationUntitled Presentation
Untitled Presentation
 
logo
logologo
logo
 
Presentation on Programming Languages.
Presentation on Programming Languages.Presentation on Programming Languages.
Presentation on Programming Languages.
 
ใบงานสำรวจตนเอง
ใบงานสำรวจตนเองใบงานสำรวจตนเอง
ใบงานสำรวจตนเอง
 
UPDATED RESUME - SALES - J BELLINI
UPDATED RESUME - SALES - J BELLINIUPDATED RESUME - SALES - J BELLINI
UPDATED RESUME - SALES - J BELLINI
 
Bioteknologi
BioteknologiBioteknologi
Bioteknologi
 
Nstituto superior tecnologico publico
Nstituto superior tecnologico publicoNstituto superior tecnologico publico
Nstituto superior tecnologico publico
 
Man Ray
Man RayMan Ray
Man Ray
 
統一7 11
統一7 11統一7 11
統一7 11
 
Eval question edited
Eval question editedEval question edited
Eval question edited
 
Imam2
Imam2Imam2
Imam2
 
Study Sunday's Lesson
Study Sunday's LessonStudy Sunday's Lesson
Study Sunday's Lesson
 
Margaritas poéticas
Margaritas poéticasMargaritas poéticas
Margaritas poéticas
 
Cómo leer mejor en voz alta. Tres puntos
Cómo leer mejor en voz alta. Tres  puntos Cómo leer mejor en voz alta. Tres  puntos
Cómo leer mejor en voz alta. Tres puntos
 
Fixed Point Realization of Iterative LR-Aided Soft MIMO Decoding Algorithm
Fixed Point Realization of Iterative LR-Aided Soft MIMO Decoding AlgorithmFixed Point Realization of Iterative LR-Aided Soft MIMO Decoding Algorithm
Fixed Point Realization of Iterative LR-Aided Soft MIMO Decoding Algorithm
 
CoolHunter
CoolHunterCoolHunter
CoolHunter
 

Similar to Property, Income and Sales Tax Performance Through Economic Fluctuations

Home Owner Interaction with Federal Income Tax System
Home Owner Interaction with Federal Income Tax SystemHome Owner Interaction with Federal Income Tax System
Home Owner Interaction with Federal Income Tax System
NAR Research
 

Similar to Property, Income and Sales Tax Performance Through Economic Fluctuations (20)

Home Owner Interaction with Federal Income Tax System
Home Owner Interaction with Federal Income Tax SystemHome Owner Interaction with Federal Income Tax System
Home Owner Interaction with Federal Income Tax System
 
Income & Estate Tax Update
Income & Estate Tax UpdateIncome & Estate Tax Update
Income & Estate Tax Update
 
2018 Pennsylvania Tax Update: The State Budget, Legislation, and Multistate T...
2018 Pennsylvania Tax Update: The State Budget, Legislation, and Multistate T...2018 Pennsylvania Tax Update: The State Budget, Legislation, and Multistate T...
2018 Pennsylvania Tax Update: The State Budget, Legislation, and Multistate T...
 
Business Whitepaper 1: Fiscal Cliff & Tax Issues/ Assessing and Mitigating th...
Business Whitepaper 1: Fiscal Cliff & Tax Issues/ Assessing and Mitigating th...Business Whitepaper 1: Fiscal Cliff & Tax Issues/ Assessing and Mitigating th...
Business Whitepaper 1: Fiscal Cliff & Tax Issues/ Assessing and Mitigating th...
 
Oregon Economic and Revenue Forecast, March 2018
Oregon Economic and Revenue Forecast, March 2018Oregon Economic and Revenue Forecast, March 2018
Oregon Economic and Revenue Forecast, March 2018
 
NJCFE Webinar-TCJA-Income Tax Update
NJCFE  Webinar-TCJA-Income Tax UpdateNJCFE  Webinar-TCJA-Income Tax Update
NJCFE Webinar-TCJA-Income Tax Update
 
Tax tour presentation
Tax tour presentationTax tour presentation
Tax tour presentation
 
The Long Lasting Impact of Tax Reform - Long Island
The Long Lasting Impact of Tax Reform - Long IslandThe Long Lasting Impact of Tax Reform - Long Island
The Long Lasting Impact of Tax Reform - Long Island
 
Vol.24. 001 State income tax withholding rates and tables for 2023 prelimin...
Vol.24. 001 State income tax withholding rates and tables  for 2023  prelimin...Vol.24. 001 State income tax withholding rates and tables  for 2023  prelimin...
Vol.24. 001 State income tax withholding rates and tables for 2023 prelimin...
 
LegislativeUpdate.pptx
LegislativeUpdate.pptxLegislativeUpdate.pptx
LegislativeUpdate.pptx
 
Testimony: Mississippi Tax Policy: Options for Reform (10/3)
Testimony: Mississippi Tax Policy: Options for Reform (10/3)Testimony: Mississippi Tax Policy: Options for Reform (10/3)
Testimony: Mississippi Tax Policy: Options for Reform (10/3)
 
NJ Future Lincoln Institute Resiliency Symposium 10 30-14 Coleman
NJ Future Lincoln Institute Resiliency Symposium 10 30-14 ColemanNJ Future Lincoln Institute Resiliency Symposium 10 30-14 Coleman
NJ Future Lincoln Institute Resiliency Symposium 10 30-14 Coleman
 
Current Tax Reform Proposals (2017)
Current Tax Reform Proposals (2017)Current Tax Reform Proposals (2017)
Current Tax Reform Proposals (2017)
 
Current Tax Reform Proposals
Current Tax Reform ProposalsCurrent Tax Reform Proposals
Current Tax Reform Proposals
 
2017 Pennsylvania Tax Update
2017 Pennsylvania Tax Update2017 Pennsylvania Tax Update
2017 Pennsylvania Tax Update
 
Income Tax Tips for PFMs Working with Military Families
Income Tax Tips for PFMs Working with Military FamiliesIncome Tax Tips for PFMs Working with Military Families
Income Tax Tips for PFMs Working with Military Families
 
Tax Foundation University 2017, Part 1: Why Tax Reform? Why Now? Why Not Just...
Tax Foundation University 2017, Part 1: Why Tax Reform? Why Now? Why Not Just...Tax Foundation University 2017, Part 1: Why Tax Reform? Why Now? Why Not Just...
Tax Foundation University 2017, Part 1: Why Tax Reform? Why Now? Why Not Just...
 
2013 Global Relocation Conference: New 2013 Relocation Payroll and Tax Issues
2013 Global Relocation Conference: New 2013 Relocation Payroll and Tax Issues2013 Global Relocation Conference: New 2013 Relocation Payroll and Tax Issues
2013 Global Relocation Conference: New 2013 Relocation Payroll and Tax Issues
 
AFCPE 2018-TCJA Workplace Seminar Presentation
AFCPE 2018-TCJA Workplace Seminar PresentationAFCPE 2018-TCJA Workplace Seminar Presentation
AFCPE 2018-TCJA Workplace Seminar Presentation
 
Tax salary 2014
Tax   salary 2014Tax   salary 2014
Tax salary 2014
 

More from Lincoln Institute of Land Policy

More from Lincoln Institute of Land Policy (20)

Land Value Capture Examples
Land Value Capture ExamplesLand Value Capture Examples
Land Value Capture Examples
 
Rethinking Property Tax Incentives for Business
Rethinking Property Tax Incentives for BusinessRethinking Property Tax Incentives for Business
Rethinking Property Tax Incentives for Business
 
Nonprofits, the Property Tax, and PILOTs in New England
Nonprofits, the Property Tax, and PILOTs in New EnglandNonprofits, the Property Tax, and PILOTs in New England
Nonprofits, the Property Tax, and PILOTs in New England
 
Working Cities Challenge
Working Cities ChallengeWorking Cities Challenge
Working Cities Challenge
 
What Research Shows about Resurgent Cities: Lessons for Policy Makers
What Research Shows about Resurgent Cities: Lessons for Policy MakersWhat Research Shows about Resurgent Cities: Lessons for Policy Makers
What Research Shows about Resurgent Cities: Lessons for Policy Makers
 
Best Practices for Funding Retirement & Benefits
Best Practices for Funding Retirement & BenefitsBest Practices for Funding Retirement & Benefits
Best Practices for Funding Retirement & Benefits
 
Nonprofits, the Property Tax, and PILOTs in New England
Nonprofits, the Property Tax, and PILOTs in New EnglandNonprofits, the Property Tax, and PILOTs in New England
Nonprofits, the Property Tax, and PILOTs in New England
 
What's Up With Property Taxes
What's Up With Property TaxesWhat's Up With Property Taxes
What's Up With Property Taxes
 
Fiscal Distress in Local Governments: Opportunities for State/Local Partnership
Fiscal Distress in Local Governments: Opportunities for State/Local PartnershipFiscal Distress in Local Governments: Opportunities for State/Local Partnership
Fiscal Distress in Local Governments: Opportunities for State/Local Partnership
 
Rhode Island's Fiscal Stability Act and Municipal Transparency Portal
Rhode Island's Fiscal Stability Act and Municipal Transparency PortalRhode Island's Fiscal Stability Act and Municipal Transparency Portal
Rhode Island's Fiscal Stability Act and Municipal Transparency Portal
 
Regional Economic Update
Regional Economic UpdateRegional Economic Update
Regional Economic Update
 
Financing Infrastructure in U.S. Cities
Financing Infrastructure in U.S. CitiesFinancing Infrastructure in U.S. Cities
Financing Infrastructure in U.S. Cities
 
Accessing Capital Markets for Capital Needs
Accessing Capital Markets for Capital NeedsAccessing Capital Markets for Capital Needs
Accessing Capital Markets for Capital Needs
 
Managing Cyber and Five Other Technology Risks
Managing Cyber and Five Other Technology RisksManaging Cyber and Five Other Technology Risks
Managing Cyber and Five Other Technology Risks
 
Fiscal Transparency in Arlington, Massachusetts
Fiscal Transparency in Arlington, MassachusettsFiscal Transparency in Arlington, Massachusetts
Fiscal Transparency in Arlington, Massachusetts
 
Current-Use Assessment of Rural Land in New England: Equity Effects and Refor...
Current-Use Assessment of Rural Land in New England: Equity Effects and Refor...Current-Use Assessment of Rural Land in New England: Equity Effects and Refor...
Current-Use Assessment of Rural Land in New England: Equity Effects and Refor...
 
Meeting the Challenge: Examples of Boston's Fiscal and Economic Development I...
Meeting the Challenge: Examples of Boston's Fiscal and Economic Development I...Meeting the Challenge: Examples of Boston's Fiscal and Economic Development I...
Meeting the Challenge: Examples of Boston's Fiscal and Economic Development I...
 
Tackling Fiscal Stress in Rhode Island
Tackling Fiscal Stress in Rhode IslandTackling Fiscal Stress in Rhode Island
Tackling Fiscal Stress in Rhode Island
 
Fiscal Resilience & Fiscal Crisis: The Case Studies of Baltimore and San Bern...
Fiscal Resilience & Fiscal Crisis: The Case Studies of Baltimore and San Bern...Fiscal Resilience & Fiscal Crisis: The Case Studies of Baltimore and San Bern...
Fiscal Resilience & Fiscal Crisis: The Case Studies of Baltimore and San Bern...
 
City Fiscal Structures and Conditions
City Fiscal Structures and ConditionsCity Fiscal Structures and Conditions
City Fiscal Structures and Conditions
 

Recently uploaded

researching client.pptxffffffffffffffffffffffffff
researching client.pptxffffffffffffffffffffffffffresearching client.pptxffffffffffffffffffffffffff
researching client.pptxffffffffffffffffffffffffff
lolsDocherty
 
一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单
一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单
一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单
enbam
 

Recently uploaded (20)

Inflation scarring: How has the cost-of-living crisis changed Britain?
Inflation scarring: How has the cost-of-living crisis changed Britain?Inflation scarring: How has the cost-of-living crisis changed Britain?
Inflation scarring: How has the cost-of-living crisis changed Britain?
 
Writing Sample-Title: Pioneering Urban Transformation: The Collective Power o...
Writing Sample-Title: Pioneering Urban Transformation: The Collective Power o...Writing Sample-Title: Pioneering Urban Transformation: The Collective Power o...
Writing Sample-Title: Pioneering Urban Transformation: The Collective Power o...
 
07/03/2024 Publiekdomeindag - voormiddag
07/03/2024 Publiekdomeindag - voormiddag07/03/2024 Publiekdomeindag - voormiddag
07/03/2024 Publiekdomeindag - voormiddag
 
2024: The FAR - Federal Acquisition Regulations, Part 35
2024: The FAR - Federal Acquisition Regulations, Part 352024: The FAR - Federal Acquisition Regulations, Part 35
2024: The FAR - Federal Acquisition Regulations, Part 35
 
PACT launching workshop presentation-Final.pdf
PACT launching workshop presentation-Final.pdfPACT launching workshop presentation-Final.pdf
PACT launching workshop presentation-Final.pdf
 
How to Save a Place: How to Fund Your Preservation Project
How to Save a Place: How to Fund Your Preservation ProjectHow to Save a Place: How to Fund Your Preservation Project
How to Save a Place: How to Fund Your Preservation Project
 
PPT Item # 8 - Tuxedo Columbine 3way Stop
PPT Item # 8 - Tuxedo Columbine 3way StopPPT Item # 8 - Tuxedo Columbine 3way Stop
PPT Item # 8 - Tuxedo Columbine 3way Stop
 
“Be part of the Plan” International Day For Biological Diversity 2024.
“Be part of the Plan” International Day For Biological Diversity 2024.“Be part of the Plan” International Day For Biological Diversity 2024.
“Be part of the Plan” International Day For Biological Diversity 2024.
 
Honeycomb for The Hive Design Inspirations
Honeycomb for The Hive Design InspirationsHoneycomb for The Hive Design Inspirations
Honeycomb for The Hive Design Inspirations
 
sarkarijobswork.online-bsf-si-vehicle-mechanic-and-constable-technical-may24.pdf
sarkarijobswork.online-bsf-si-vehicle-mechanic-and-constable-technical-may24.pdfsarkarijobswork.online-bsf-si-vehicle-mechanic-and-constable-technical-may24.pdf
sarkarijobswork.online-bsf-si-vehicle-mechanic-and-constable-technical-may24.pdf
 
Proposed Facility Types: Chesapeake Trails and Connectivity Plan
Proposed Facility Types: Chesapeake Trails and Connectivity PlanProposed Facility Types: Chesapeake Trails and Connectivity Plan
Proposed Facility Types: Chesapeake Trails and Connectivity Plan
 
researching client.pptxffffffffffffffffffffffffff
researching client.pptxffffffffffffffffffffffffffresearching client.pptxffffffffffffffffffffffffff
researching client.pptxffffffffffffffffffffffffff
 
30052024_FI_Ministry of Agriculture final.pptx
30052024_FI_Ministry of Agriculture final.pptx30052024_FI_Ministry of Agriculture final.pptx
30052024_FI_Ministry of Agriculture final.pptx
 
#Bepartoftheplan on International Day For Biological Diversity 2024
#Bepartoftheplan on International Day For Biological Diversity 2024#Bepartoftheplan on International Day For Biological Diversity 2024
#Bepartoftheplan on International Day For Biological Diversity 2024
 
Item # 6 - 7001 Broadway Significance Review
Item # 6 - 7001 Broadway Significance ReviewItem # 6 - 7001 Broadway Significance Review
Item # 6 - 7001 Broadway Significance Review
 
PPT Item # 4 - 525 Argo Avenue ARB Case # 926F
PPT Item # 4 - 525 Argo Avenue ARB Case # 926FPPT Item # 4 - 525 Argo Avenue ARB Case # 926F
PPT Item # 4 - 525 Argo Avenue ARB Case # 926F
 
Item # 5 - 5330 Broadway ARB Case # 930F
Item # 5 - 5330 Broadway ARB Case # 930FItem # 5 - 5330 Broadway ARB Case # 930F
Item # 5 - 5330 Broadway ARB Case # 930F
 
PPT Item # 5 - 5330 Broadway ARB Case # 930F
PPT Item # 5 - 5330 Broadway ARB Case # 930FPPT Item # 5 - 5330 Broadway ARB Case # 930F
PPT Item # 5 - 5330 Broadway ARB Case # 930F
 
一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单
一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单
一比一原版(Adelaide毕业证)阿德莱德大学毕业证成绩单
 
Who are the Sherden Yale Historical Review
Who are the Sherden Yale Historical ReviewWho are the Sherden Yale Historical Review
Who are the Sherden Yale Historical Review
 

Property, Income and Sales Tax Performance Through Economic Fluctuations

  • 1. PROPERTY, INCOME, AND SALES TAX PERFORMANCE THROUGH ECONOMIC FLUCTUATIONS John E. Anderson University of Nebraska-Lincoln and Lincoln Institute of Land Policy
  • 3. New Estimates of State and Local Tax Resilience • Estimate relationship between changes in state GDP and changes in state and local tax revenue • Property, income, and sales tax data • Property tax data: 1967-2012 • Income and sales tax data: 1972-2012 • Estimate two relationships: • Long-run buoyance: change in revenue in response to change in state GDP • Error correction: response following a GDP shock, returning to long-run equilibrium
  • 4. Two Measures of Resilience • Buoyance measures the long-run relationship between changes in state GDP and changes in tax revenue • No adjustments for policy offsets (i.e. tax rate or base changes) • A buoyancy estimate of 1.0 indicates that a one percent change in GDP results in a one percent change in tax revenue • An estimate less than 1.0 indicates a less than proportionate change in tax revenue • An estimate more than 1.0 indicates a more than proportionate change in tax revenue • Error correction term measures how a tax system responds to a GDP shock as it adjusts to its long-run equilibrium • A negative sign indicates that a positive error in the previous year (revenues above trend) is followed by a negative adjustment in the following year
  • 5. Tax Buoyancy and Error Correction Estimates, Overall Estimates for the 50 States and D.C. Property Tax Income Tax Sales Tax Long-run buoyancy 0.78 1.06 0.90 Error correction -0.75 -0.21 -0.81 • The property tax is the most stable revenue source with a long-run buoyancy estimate less than one; followed by the sales tax which is more buoyant • The income tax is the least stable revenue source, reacting more than proportionately to state GDP shocks • In terms of error correction, adjusting to shocks that displace states from their long-run equilibrium, the sales and property tax systems adjust more quickly, while income tax systems adjust much more slowly
  • 6. Long-Run Tax Buoyancy—New England States Property Tax Income Tax Sales Tax Connecticut 0.82*** 4.63*** 0.52*** Maine 0.53 0.68 0.83*** Massachusetts -1.57 1.17*** 0.78*** New Hampshire 0.86*** Rhode Island -0.31 1.09** 0.83*** Vermont 1.02*** 1.17*** 1.02*** ***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels
  • 7. Long-Run Tax Buoyancy—New England States • Property tax: • CT, NH and VT have property tax buoyancy in the range of 0.8 to 1.0, somewhat less than proportional responses to changes in state GDP • ME, MA, and RI have no buoyancy, i.e. fluctuations in state GDP have little or no impact on property tax revenues • Income tax: • CT has an extremely volatile income tax system (4.6) • MA, RI, and VT have buoyancy estimates that are greater than one indicating more than proportional responses to changes in state GDP (1.1 to 1.2) • Sales tax: • VT has unitary buoyancy (1.0) • ME, MA, and RI have buoyancy of about 0.8, indicating less than proportional response • CT has a less response sales tax system (0.5)
  • 8. Error Correction Terms—New England States Property Tax Income Tax Sales Tax Connecticut -0.11 -0.37*** -0.76*** Maine -1.14*** -0.07 -0.83*** Massachusetts -1.11*** -0.38*** -1.03*** New Hampshire -0.98*** Rhode Island -1.12*** -0.13 -1.22*** Vermont -0.76*** -0.62*** -0.90*** ***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels
  • 9. Error Correction Terms—New England States • Property tax: • Error correction terms are strongest for property tax systems • For all New England states, except CT, the error correction terms are in the range of 1.0 to 1.1, indicating quick recovery after a GDP shock • Income tax: • Error correction terms for CT, MA, and VT are much smaller, in the range of 0.3 to 0.6, indicating slow corrections after GDP shocks • ME and RI terms are essentially zero, indicating little to no correction after a shock • Sales tax: • Error correction terms are in the range of 0.8 to 1.2 indicating relatively strong corrections after GDP shocks • RI has the strongest correction process
  • 10. Policy Implications • Volatility through the business cycle depends on the state and local portfolio of revenue sources • Reliance on property tax revenue produces relative stability and resilience • Reliance on income taxes produces greater volatility and slower recovery resilience to shocks • Reliance on sales tax revenue also produces relative stability and resilience • Individual state performance depends on the portfolio of revenue sources
  • 11. State and Local Tax Revenue Shares (%) New England States, 2013 Property Tax (%) Income Tax (%) Sales Tax (%) Connecticut 40 32 28 Maine 43 26 31 Massachusetts 40 27 33 New Hampshire 77 2 21 Rhode Island 48 21 31 Vermont 47 21 32
  • 12.
  • 13.
  • 14. Conclusions • State revenue source portfolios have a direct impact on the buoyancy and resilience of state tax systems • Evidence indicates that states more heavily reliant on property and sales taxes experience more stable revenue streams and faster error corrections following GDP shocks • Evidence also shows that states more heavily reliant on income taxes experience less stable revenue streams and have slow error correction processes • If the policy objective is to have a stable revenue stream and a resilient tax system, this evidence points toward greater reliance on property and sales taxes
  • 15. Optional Middle Atlantic slides for comparison
  • 16. State and Local Tax Revenue Shares Middle Atlantic States, 2013 Property Tax Income Tax Sales Tax New Jersey 52 24 24 New York 36 36 28 Pennsylvania 34 30 36
  • 17. Long-Run Tax Buoyancy—Middle Atlantic States Property Tax Income Tax Sales Tax New Jersey -0.51 1.57 0.73*** New York 1.13*** 1.39*** 0.73*** Pennsylvania -0.01 1.25*** 0.95*** ***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels
  • 18. Error Correction Terms—Middle Atlantic States Property Tax Income Tax Sales Tax New Jersey -1.10*** -0.19*** -0.80*** New York -0.10 -0.57*** -0.92*** Pennsylvania -1.09*** -0.68*** -0.87*** ***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels