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Urban Malls, Tax Base Migration, and State Intergovernmental Aid

Author

Listed:
  • Stan Chervin

    (Tennessee Advisory Commission on Intergovernmental Relations)

  • Kelly Edmiston

    (Georgia State University)

  • Matthew N. Murray

    (University of Tennessee)

Abstract

Decentralized systems of government finance give rise to fiscal disparities due to interjurisdictional variations in tax bases and expenditure needs. Intergovernmental aid is used to address such disparities. This article explores changes in local tax capacity and intergovernmental aid resulting from urban shopping malls that extract retail sales and sales tax revenue away from surrounding areas, especially rural counties. A model is developed and estimated to determine the impact of urban malls on local government sales tax bases, controlling for sales tax rate differentials and other factors. The results reveal a 15.9% decline in the sales tax base for counties in close proximity to two newmalls. The analysis is extended to examine impacts of changing local tax capacity on state education aid. Based on the programconsidered here, less than 20% of the loss in own-source revenue is recovered through increased aid.

Suggested Citation

  • Stan Chervin & Kelly Edmiston & Matthew N. Murray, 2000. "Urban Malls, Tax Base Migration, and State Intergovernmental Aid," Public Finance Review, , vol. 28(4), pages 309-334, July.
    • Handle: RePEc:sae:pubfin:v:28:y:2000:i:4:p:309-334
    DOI: 10.1177/109114210002800402
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    References listed on IDEAS

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    Cited by:

    1. Richard Hawkins & Matthew N. Murray, 2004. "Explaining Interjurisdictional Variations in Local Sales Tax Yield," Public Finance Review, , vol. 32(1), pages 82-104, January.
    2. Rossitza B. Wooster & Joshua W. Lehner, 2010. "Reexamining The Border Tax Effect: A Case Study Of Washington State," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 511-523, October.
    3. Jason M. Fletcher & Matthew N. Murray, 2006. "Competition over the Tax Base in the State Sales Tax," Public Finance Review, , vol. 34(3), pages 258-281, May.
    4. William F. Fox & Matthew N. Murray, 2005. "Sales Taxation in a Global Economy," Contributions to Economic Analysis, in: Taxing the Hard-to-tax: Lessons from Theory and Practice, pages 221-244, Emerald Group Publishing Limited.

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