Using excise taxes to finance state government: Do neighbouring state taxation policy and cross-border markets matter?
Publication Source

Journal of Regional Science

Journal article
The Americas
Economy status
High-income economies
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In this paper the excise tax policy of U.S. state governments is analyzed with special attention to how this policy is influenced by the level of excise taxation in neighboring states, “border‐tax effects,” and the relative size of the market located across state boundaries. Using a panel data set, state policies towards the taxation of cigarettes, all alcoholic beverages, beer, distilled liquor, motor fuel, and insurance are investigated within the context of a vote‐maximizing model of collective decision making. The role of the industry in that state whose goods and services are singled out for special taxation is also examined.