Location

Portland State University

Start Date

7-5-2019 1:30 PM

End Date

7-5-2019 3:00 PM

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.

Persistent Identifier

https://archives.pdx.edu/ds/psu/28954

Included in

Economics Commons

Share

COinS
 
May 7th, 1:30 PM May 7th, 3:00 PM

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.