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A Regional Computable General Equilibrium Analysis of Property Tax Rate Caps and a Sales Tax Rate Increase in Indiana

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  • Nalitra Thaiprasert
  • Dagney Faulk
  • Michael J. Hicks

Abstract

We use a regional computable general equilibrium (CGE) model and Indiana data to examine both the short-run and the long-run effects of property tax rate limits and an increase in the sales tax rate. We find that the property tax caps and sales tax rate increase have a relatively small impact on aggregate economic measures in the short run and a positive effect in the long run. Higher-income households experience larger increases in income than lower-income households in terms of the dollar amount of the increase, but lower-income households experience larger gains as a percentage of labor income. The value of output (sales) increases in the long run with construction, certain manufacturing industries, and wholesale trade experiencing the largest increases.

Suggested Citation

  • Nalitra Thaiprasert & Dagney Faulk & Michael J. Hicks, 2013. "A Regional Computable General Equilibrium Analysis of Property Tax Rate Caps and a Sales Tax Rate Increase in Indiana," Public Finance Review, , vol. 41(4), pages 446-472, July.
    • Handle: RePEc:sae:pubfin:v:41:y:2013:i:4:p:446-472
    DOI: 10.1177/1091142112463725
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    References listed on IDEAS

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    2. Justin M. Ross & Madeline Farrell & Lang Kate Yang, 2015. "Indiana's Property Tax Caps: Old Idea, New Approach, and Surprising Incentives," Public Budgeting & Finance, Wiley Blackwell, vol. 35(4), pages 18-41, December.
    3. Vintilă Georgeta & Ţibulcă Ioana Laura, 2014. "A Study on the Evolution of Tax Pressure in Romania," Scientific Annals of Economics and Business, Sciendo, vol. 61(1), pages 1-12, July.
    4. Andrew Feltenstein & Mark Rider & David L. Sjoquist & John V. Winters, 2019. "The Impact of Interstate Mobility on the Effectiveness of Property Tax Reduction in Georgia," Center for State and Local Finance Working Paper Series cslf1907, Andrew Young School of Policy Studies, Georgia State University.

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