Individual tax rates and regional tax revenues: a cross-state analysis

Individual tax rates and regional tax revenues: a cross-state analysis. Regional Studies. This paper analyzes the effects of state-level personal tax rates on state tax revenue and individual welfare. The policy analysis based on a general equilibrium model suggests that tax revenues would benefit from higher wage-income, sales or property taxes, while any increase in dividend-income tax would result in a reduction of revenues. It is also shown that individuals would suffer from an increase in state-level wage-income tax, dividend tax or sales tax, while they would benefit from an increase in property taxes. The heterogeneity across states is determined by a TaxIndex, a weighted average of initial taxes at the state level.