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Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing?

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  • Daria Burnes
  • David Neumark
  • Michelle J. White

Abstract

We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores is significantly increased in jurisdictions where sales tax rates increase. We also find that manufacturing employment is significantly lowered in these jurisdictions. These results suggest that local officials in jurisdictions with higher sales tax rates concentrate on attracting large stores and shopping centers and that their efforts crowd out manufacturing. A rise of one percentage point in a county-level local sales tax rate is predicted to result in 258 additional retail jobs and the loss of 838 manufacturing jobs.

Suggested Citation

  • Daria Burnes & David Neumark & Michelle J. White, 2011. "Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing?," NBER Working Papers 16932, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16932
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    1. Higher local sale tax leads to more local retail activity
      by Economic Logician in Economic Logic on 2011-05-26 21:38:00

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    Cited by:

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    3. Givord, Pauline & Quantin, Simon & Trevien, Corentin, 2018. "A long-term evaluation of the first generation of French urban enterprise zones," Journal of Urban Economics, Elsevier, vol. 105(C), pages 149-161.
    4. Gian-Claudia Sciara & Kristin Lovejoy & Susan Handy, 2018. "The Impacts of Big Box Retail on Downtown: A Case Study of Target in Davis (CA)," Journal of the American Planning Association, Taylor & Francis Journals, vol. 84(1), pages 45-60, January.
    5. Yugang Tang & Zhihao Su & Yilin Hou & Zhendong Yin, 2023. "Tax Streams, Land Rents and Urban Land Allocation," CESifo Working Paper Series 10812, CESifo.
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    7. Dan S. Rickman, 2013. "Should Oklahoma Be More Like Texas? A Taxing Decision," The Review of Regional Studies, Southern Regional Science Association, vol. 43(1), pages 1-22, Summer.
    8. Sciara, Gian-Claudia, 2015. "Measuring Land Use Performance: Policy, Plan, and Outcome," Institute of Transportation Studies, Working Paper Series qt9w64r1qz, Institute of Transportation Studies, UC Davis.
    9. Agrawal, David R., 2016. "Local fiscal competition: An application to sales taxation with multiple federations," Journal of Urban Economics, Elsevier, vol. 91(C), pages 122-138.
    10. Yang, Zhijiu & Ding, Hai & Zhu, Wenbo, 2024. "Environmental regulation and land resource allocation in China: Empirical evidence from micro-level land transaction data," Land Use Policy, Elsevier, vol. 140(C).
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    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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