Tax Structure and Public Sector Growth

29 Pages Posted: 25 Jul 2007 Last revised: 11 Jul 2010

See all articles by Daniel R. Feenberg

Daniel R. Feenberg

National Bureau of Economic Research (NBER)

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: September 1986

Abstract

It has been hypothesized that a jurisdiction's tax structure exerts an independent effect upon the growth of its public sector. We test this hypothesis by examining the relationship between the growth of state general expenditure and the elasticity of tax revenues with respect to income. The work takes advantage of a very careful set of income elasticities for the personal income and sales tax systems for each state, for every year from 1978 to 1983. The main conclusion is that the data do not support the notion that the form of the tax structure exerts an independent effect on public sector growth.

Suggested Citation

Feenberg, Daniel R. and Rosen, Harvey S., Tax Structure and Public Sector Growth (September 1986). NBER Working Paper No. w2020, Available at SSRN: https://ssrn.com/abstract=344813

Daniel R. Feenberg (Contact Author)

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Harvey S. Rosen

Princeton University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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United States

CESifo (Center for Economic Studies and Ifo Institute)

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Germany

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