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School District Income Taxes: New Revenue or a Property Tax Substitute?
Author(s) -
ROSS JUSTIN M.,
NGUYENHOANG PHUONG
Publication year - 2013
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/j.1540-5850.2013.12004.x
Subject(s) - endogeneity , property tax , economics , revenue , tax revenue , gross income , income tax , state income tax , indirect tax , labour economics , public economics , property (philosophy) , tax deferral , tax reform , econometrics , finance , philosophy , epistemology
Using a panel of 609 Ohio school districts from 1990 to 2008, this paper investigates the effects of school district income tax on operating property tax revenue. After correcting for endogeneity, the results do indicate a substitution effect that lowers the property tax levy. Despite reduced property taxes, greater income taxation is mostly to increase total revenues. By how much total revenues increase varies widely depending on the relative and absolute sizes of property and income taxes. We also find that school districts were able to increase the amount of the property tax by a greater amount than nonadopting districts in the years following the adoption of income taxes.