haku: @author Wrobel, M. V. / yhteensä: 1
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| Tekijä: | Feldstein, M. Wrobel, M. V. |
| Otsikko: | Can state taxes redistribute income ? |
| Lehti: | Journal of Public Economics
1998 : JUN, VOL. 68:3, p. 369-396 |
| Asiasana: | TAXATION DISTRIBUTION MIGRATION |
| Kieli: | eng |
| Tiivistelmä: | The evidence of the paper supports the basic theoretical presumption that state and local governments cannot redistribute income. Since individuals can avoid unfavorable taxes by migrating to jurisdictions that offer more favorable tax conditions, a relatively unfavorable tax will cause gross wages to adjust until the resulting net wage is equal to that available elsewhere. The current empirical findings go beyond confirming this long-run tendency and show that gross wages adjust rapidly to the changing tax environment. Thus, states cannot redistribute income for a period of even a few years. The adjustment of gross wages to tax rates implies that a more progressive tax system raises the cost to firms of hiring more highly skilled employees and reduces the cost of lower skilled labor. Thus, a more progressive tax induces firms to hire fewer high skilled employees, and to hire more low skilled employees. Due to state taxes' lacking ability to alter net wages, there can be no trade-off at the level of state btw. economic efficiency and distribution goals. Shifts in state tax progressivity, by changing the structure of employment in the state and distorting the mix of labor inputs used by firms in the state, create deadweight efficiency losses without achieving any net redistribution. |
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