Presentation Type
Oral Presentation
Location
Portland State University
Start Date
5-7-2019 1:30 PM
End Date
5-7-2019 3:00 PM
Subjects
State taxation -- Oregon, Income tax -- Washington (State), Tax incidence, Taxation -- Oregon, Taxation -- Washington (State)
Abstract
Washington and Oregon states rely on different tax systems. Washington collects sales tax but no personal income tax, while Oregon collects a personal income tax but no sales tax. These differences create an opportunity to measure the effects of tax policy on consumer spending. Previous literature has estimated the effect of border tax differences on aggregate spending patterns. This paper uses a hierarchical model to measure the effect of individual sales tax burden on individual-level spending. First, using data from the Consumer Expenditure survey, we estimate individual sales tax burden. Then, using these estimates in a second-stage regression simulation model, we find a significant negative relationship between higher sales tax burden and expenditure on groceries for households earning less than $50,000 annually.
Rights
© Copyright the author(s)
IN COPYRIGHT:
http://rightsstatements.org/vocab/InC/1.0/
This Item is protected by copyright and/or related rights. You are free to use this Item in any way that is permitted by the copyright and related rights legislation that applies to your use. For other uses you need to obtain permission from the rights-holder(s).
DISCLAIMER:
The purpose of this statement is to help the public understand how this Item may be used. When there is a (non-standard) License or contract that governs re-use of the associated Item, this statement only summarizes the effects of some of its terms. It is not a License, and should not be used to license your Work. To license your own Work, use a License offered at https://creativecommons.org/
Persistent Identifier
https://archives.pdx.edu/ds/psu/28954
Included in
Comparing Tax Structures in Washington and Oregon: Tax Burden Impacts on Grocery Consumption
Portland State University
Washington and Oregon states rely on different tax systems. Washington collects sales tax but no personal income tax, while Oregon collects a personal income tax but no sales tax. These differences create an opportunity to measure the effects of tax policy on consumer spending. Previous literature has estimated the effect of border tax differences on aggregate spending patterns. This paper uses a hierarchical model to measure the effect of individual sales tax burden on individual-level spending. First, using data from the Consumer Expenditure survey, we estimate individual sales tax burden. Then, using these estimates in a second-stage regression simulation model, we find a significant negative relationship between higher sales tax burden and expenditure on groceries for households earning less than $50,000 annually.