IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v41y2013i4p489-503.html
   My bibliography  Save this article

Sales Tax Collections in Nonmetropolitan Communities

Author

Listed:
  • B. Wade Brorsen
  • Notie H. Lansford

Abstract

Small communities sometimes increase their local sales tax rate in order to maintain or expand public services. The question addressed here is what is the net effect of changing sales tax rates on revenues from sales taxes? Using both semiparametric and nonparametric regression, we find retail sales to be mostly unaffected by sales tax rates as long as the local rate is less than 4 percent. At rates higher than 4 percent, however, there is a severe reduction in sales, yet not enough that sales tax revenues would decrease with increased rates. For a penny increase in sales tax rates from 4 cents, a city can expect their revenues to go up 0.86 cents according to the semiparametric model and 0.74 cents according to the parametric model.

Suggested Citation

  • B. Wade Brorsen & Notie H. Lansford, 2013. "Sales Tax Collections in Nonmetropolitan Communities," Public Finance Review, , vol. 41(4), pages 489-503, July.
    • Handle: RePEc:sae:pubfin:v:41:y:2013:i:4:p:489-503
    DOI: 10.1177/1091142113482571
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1091142113482571
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1091142113482571?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. J. L. Love, 1992. "Local Sales Tax Options: A Case Study Of South Georgia," The Review of Regional Studies, Southern Regional Science Association, vol. 22(1), pages 105-114, Summer.
    2. George Ebai & Thomas R. Harris, 1997. "Factors Influencing Trade Area Activity in the Great Basin Area," The Review of Regional Studies, Southern Regional Science Association, vol. 27(3), pages 251-275, Winter.
    3. Harris, Thomas R. & Ebai, George E., 1997. "Factors Influencing Trade Area Capture in the Great Basin Area," 1997 Annual Meeting, July 13-16, 1997, Reno\ Sparks, Nevada 35891, Western Agricultural Economics Association.
    4. Rogers, Cynthia L., 2004. "Local Option Sales Tax (LOST) Policy on the Urban Fringe," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 34(1), pages 1-24.
    5. Walsh, Michael J. & Jones, Jonathan D., 1988. "More Evidence on the "Border Tax" Effect: The Case of West Virginia, 1979-84," National Tax Journal, National Tax Association, vol. 41(2), pages 261-65, June.
    6. Walsh, Michael J. & Jones, Jonathan D., 1988. "More Evidence on the "Border Tax" Effect: The Case of West Virginia, 1979-84," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(2), pages 261-265, June.
    7. Glenn Ellison & Sara Fisher Ellison, 2009. "Tax Sensitivity and Home State Preferences in Internet Purchasing," American Economic Journal: Economic Policy, American Economic Association, vol. 1(2), pages 53-71, August.
    8. Bekkerman, Anton & Brester, Gary W. & McDonald, Tyrel J., 2013. "A Semiparametric Approach to Analyzing Differentiated Agricultural Products," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(1), pages 1-16, February.
    9. Derrick, Frederick W. & Scott, Charles E., 1998. "Sales tax equity: Who bears the burden?," The Quarterly Review of Economics and Finance, Elsevier, vol. 38(2), pages 227-237.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lansford, Notie H., Jr. & Brorsen, B. Wade & Woods, Michael D., 2001. "A Retail Sales / Sales Tax Paradox," A.E. Series 92071, Oklahoma State University, Department of Agricultural Economics.
    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. Rogers, Cynthia L., 2004. "Local Option Sales Tax (LOST) Policy on the Urban Fringe," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 34(1), pages 1-24.
    4. Agrawal, David R., 2014. "LOST in America: Evidence on local sales taxes from national panel data," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 147-163.
    5. Tosun Mehmet S & Skidmore Mark L, 2007. "Cross-Border Shopping and the Sales Tax: An Examination of Food Purchases in West Virginia," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-20, December.
    6. Georgeanne M. Artz & Kevin D. Duncan & Arthur P. Hall & Peter F. Orazem, 2016. "Do State Business Climate Indicators Explain Relative Economic Growth At State Borders?," Journal of Regional Science, Wiley Blackwell, vol. 56(3), pages 395-419, June.
    7. J. L. Love, 1992. "Local Sales Tax Options: A Case Study Of South Georgia," The Review of Regional Studies, Southern Regional Science Association, vol. 22(1), pages 105-114, Summer.
    8. 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.
    9. repec:rri:wpaper:200507 is not listed on IDEAS
    10. Rohlin, Shawn M. & Thompson, Jeffrey P., 2018. "Local sales taxes, employment, and tax competition," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 373-383.
    11. Wang, Lingxiao & Zheng, Yuqing, 2024. "Why are grocery foods taxed in the United States? Theory and spatial evidence from multilevel government interactions," Regional Science and Urban Economics, Elsevier, vol. 104(C).
    12. Benjamin Harbolt, 2019. "Tax Avoidance through E-Commerce and Cross-Border Shopping," CESifo Working Paper Series 7814, CESifo.
    13. Kathryn L. Combs & Jaebeom Kim & Jim Landers & John A. Spry, 2016. "The Responsiveness of Casino Revenue to the Casino Tax Rate," Public Budgeting & Finance, Wiley Blackwell, vol. 36(3), pages 22-44, September.
    14. Albrecht, Maxwell & Brown, Anne & Lederman, Jaimee & Taylor, Brian D. & Wachs, Martin, 2017. "The Equity Challenges and Outcomes of California County Transportation Sales Tax," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt39q2758w, Institute of Transportation Studies, UC Berkeley.
    15. Emmanuel Chavez & Cristobal Dominguez, 2021. "Who pays for a Value Added Tax Hike at an International Border? Evidence from Mexico," PSE Working Papers halshs-03364026, HAL.
    16. Richard Friberg & Frode Steen & Simen A. Ulsaker, 2022. "Hump-Shaped Cross-Price Effects and the Extensive Margin in Cross-Border Shopping," American Economic Journal: Microeconomics, American Economic Association, vol. 14(2), pages 408-438, May.
    17. Eric James Stokan, 2019. "An Estimate of the Local Economic Impact of State-Level Earned Income Tax Credits," Economic Development Quarterly, , vol. 33(3), pages 170-186, August.
    18. Melissa Gentry & Nadia Greenhalgh-Stanley & Shawn M. Rohlin & Jeffrey P. Thompson, 2020. "Dynamic Sales Tax Competition: Evidence from Panel Data at the Border," Working Papers 20-5, Federal Reserve Bank of Boston.
    19. Hu, Yu Jeffrey & Tang, Zhulei, 2014. "The impact of sales tax on internet and catalog sales: Evidence from a natural experiment," International Journal of Industrial Organization, Elsevier, vol. 32(C), pages 84-90.
    20. Saxon, Nicholas & Tosun, Mehmet S. & Yang, Jingjing, 2015. "State and Local Sales Taxes and Business Activity in the United States," IZA Discussion Papers 9413, Institute of Labor Economics (IZA).
    21. Ghoddusi, Hamed & Rafizadeh, Nima & Rahmati, Mohammad H., 2018. "Price elasticity of gasoline smuggling: A semi-structural estimation approach," Energy Economics, Elsevier, vol. 71(C), pages 171-185.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:41:y:2013:i:4:p:489-503. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.