Incidence and Allocation Effects of a State Fiscal Policy Shift: The Florio Initiatives in New Jersey / William T. Bogart, David F. Bradford, Michael G. Williams.

Format:

Book

Author/Creator:

Bogart, William T.

Contributor:

National Bureau of Economic Research.

Bradford, David F.

Williams, Michael G.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4177.

NBER working paper series no. w4177

Language:

English

Subjects (All):

Econometric models.

Income tax--New Jersey.

Income tax.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Incidence and Allocation Effects of a State Fiscal Policy Shift

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Cambridge, Massachusetts : National Bureau of Economic Research, 1992.

Summary:

We calculate the incidence of recent changes to the New Jersey state tax system on a sample of homeowners. Our analysis distinguishes between business-as-usual responses to an evolving fiscal situation and tax changes that constitute a surprise. The latter have incidence effects; the former do not. We conclude that, if the changes carried out by NJ Governor Jim Florio are regarded as permanent, they effected a one-time wealth redistribution from, on average, higher-income homeowners toward lower-income homeowners and from owners of suburban residential property toward owners of urban residential property. Although effects on the averages for identifiable groups are clear and significant there is very considerable variation in the effects on individual homeowners within groups. We also estimate the allocation effects of the tax changes using a general equilibrium model that incorporates the option of in-and out migration. The results suggest that the changes will induce a sizable migration of weal thy and high-income people out of the state.

Notes:

Print version record

October 1992.