Federal tax deductibility for local taxes and its effect on local revenue policies

This dissertation analyzes whether and how changes in federal tax policy affect local tax policies, specifically, the elimination of the federal deductibility of state and local taxes for individual taxpayers by the Tax Reform Act of 1986 (TRA86) in 59 California cities. Two methods are used in the study: a survey of local revenue officials and a time event time-series/cross sectional sales tax reliance study.^ The reliance study uses a covariance model to pool cross-section and time-series observations. The results of the reliance study indicate a statistically significant overall decline in sales tax reliance after 1986. The results of the survey indicate that local policy makers generally do not believe that federal deductibility is an important factor when considering raising local sales taxes. Further analysis shows that local revenue officials claiming federal deductibility is not an important factor are associated mostly with cities that registered no significant decline in sales tax reliance after 1986. Similarly, local revenue officials claiming federal deductibility is an important factor when considering local tax policy are associated mostly with cities that suffered a significant decline in sales tax reliance after 1986.^ Of that group, further analysis shows that the declines in sales tax reliance are associated mostly with cities located in the southwestern part of the state. When compared to other cities in the state, an analysis of variance reveals that there are a series of statistically significant factors associated with southwestern cities which may contribute to the decline in sales tax reliance following the enactment of the Tax Reform Act of 1986. ^

Annual Report of the Iowa Department of Revenue FY1996

Annual Report of the Iowa Department of Revenue FY1996

Annual Report of the Iowa Department of Revenue FY1997

Annual Report of the Iowa Department of Revenue FY1997

Annual Report of the Iowa Department of Revenue FY1998

Annual Report of the Iowa Department of Revenue FY1998

Annual Report of the Iowa Department of Revenue FY1999

Annual Report of the Iowa Department of Revenue FY1999

Annual Report of the Iowa Department of Revenue FY2000

Annual Report of the Iowa Department of Revenue FY2000

Annual Report of the Iowa Department of Revenue FY2001

Annual Report of the Iowa Department of Revenue FY2001

Annual Report of the Iowa Department of Revenue FY2002

Annual Report of the Iowa Department of Revenue FY2002

Annual Report of the Iowa Department of Revenue FY2003

Annual Report of the Iowa Department of Revenue FY2003

Annual Report of the Iowa Department of Revenue FY2004

Annual Report of the Iowa Department of Revenue FY2004

Annual Report of the Iowa Department of Revenue FY2005

Annual Report of the Iowa Department of Revenue FY2005

Addendum to Annual Report of the Iowa Department of Revenue FY2006

Addendum to Annual Report of the Iowa Department of Revenue FY2006

Annual Report of the Iowa Department of Revenue FY2006

Annual Report of the Iowa Department of Revenue FY2006

Annual Report of the Iowa Department of Revenue FY2007

Annual Report of the Iowa Department of Revenue FY2007

Addendum to Annual Report of the Iowa Department of Revenue FY2007

Addendum to Annual Report of the Iowa Department of Revenue FY2007. Comparison to prior years. Local option tax distributions.