Faulty’ fiscal illusion

Examining the relationship between revenue diversification and tax burden in major US cities across the economic cycle

Bibliographic Data

ID6301634
AuthorsYu Shi (0000-0002-8585-9484, University of North Texas, corresponding author), Jie Tao (0000-0002-1444-8709, University of North Texas)
Year2018
Volume44
Issue3
Pages416-435
Publication date2018-05-04
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueLocal Government Studies (JOURNAL)
Journal identifiersISSN: 0300-3930 • E-ISSN: 1743-9388
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/03003930.2018.1433662
OpenAlexW2791194824
LanguageEN
Citations received3
References cited27

We investigate how revenue diversification affects tax burden in major U.S cities as it interacts with fiscal balance reported in the general fund over the economic cycle. We find that more diversified cities have higher tax burdens, and that this effect is strengthened when cities maintain a large surplus in the general fund. We also test models of revenue diversification's impact on tax burden using data from 1995 to 2010, separated into good fiscal years (1995-2001, 2004-2007, 2010) and bad fiscal years (2002-2003, 2008-2009). Model estimates show that greater revenue diversification leads to higher tax burden in bad fiscal years but this outcome is not found in good fiscal years. Cities seek greater revenue diversification when they are experiencing economic recessions. This study contains important implications for local financial management and contributes to the literature on revenue diversification and tax burden

Business · Business cycle · Diversification (marketing strategy · Economic policy · Economics · Macroeconomics · Monetary economics · Public economics · Recession · Revenue · Tax revenue · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth · Housing Market and Economics · Finance

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