This paper analyses the effects of the change in the US sales tax on economic activity and city size using a computable general equilibrium (CGE) model. Previous works have been designed to isolate the effects of a sales tax change on the particular parameters, such as city size, non-central retail activity and the value of housing. This research summarises the effects of a change in the sales tax rate on all the relevant variables in the context of one model. The underlined theoretical foundation is tested using data collected for the city of Fort Collins, a jurisdiction of approximately 100 000 people in northern Colorado, USA.
Get full access to this article
View all access options for this article.
References
1.
Armington, P.S. (1969) Theory of demand for products distinguished by place of production, IMF Staff Papers, 16, pp. 159-178.
2.
Berck, P. and Dalaben, A. (1995) A CGE model for California tax policy analysis: a review of the literature. University of California, Berkeley (mimeograph).
3.
Berck, P., Gola, E. and Smith, B.R. (1997) State tax policy, labor, and tax revenue feedback effects, Industrial Relations, 36(4), pp. 339-418.
4.
Brueckner, J.K. and Kim, H.A. (2000) Urban sprawl and the property tax. Working Paper, University of Illinois at Urbana-Champaign.
5.
Ghaus, A.F.A. (1995). Optimal local sales tax, UrbanStudies, 32, pp. 1369-1381.
6.
Hansen, J.L., Formby, J.P. and Smith, W.J. (1998) Estimating the income elasticity of demand for housing: a comparison of traditional and lorenz-concentration curve methodologies , Journal of Housing Economics, 7, pp. 328-342.
7.
Hoffmann, S., Robinson, S. and Subramanian, S. (1996) The role of defense cuts in California recession: computable general equilibrium models and interstate factor mobility, Journal of Regional Science, 36(4), pp. 571-595.
8.
Jones, R. and Whalley, J. (1989) A Canadian regional general equilibrium model and some applications, Journal of Urban Economics, 25(3), pp. 368-404.
9.
Man, J.Y. and Bell, M.E. (1996) The impact of local sales tax on the value of owner-occupied housing, Journal of Urban Economics, 39, pp.114-131.
10.
Pasha, H.A. and Ghaus, A.F.A. (1995) General equilibrium effects of local taxes, Journal of Urban Economics, 38, pp. 253-271.
11.
Polinsky, A.M. (1977) The demand for housing: a study in specification and grouping, Econometrica, 45(2), pp. 447-461.
12.
Pryce, G. (1999) Construction elasticities and land availability: a two-stage least-squares model of housing supply using the variable elasticity approach, UrbanStudies, 36(13), pp. 2283-2304.
13.
Schwarm, W. and Cutler, H. (2003) Building small city and town SAMs and CGE models, Review of Urban & Regional DevelopmentStudies, 15(2), pp. 132-146.
14.
Seung, C.K. and Kraybill, D.S. (1999). The effects of infrastructure investment: a two-sector dynamic computable general equilibrium analysis for Ohio, International Regional Science Review, 24(2), pp. 261-281.
15.
Wassmer, R.W. (2002) Fiscalisation of land use, urban growth boundaries and non-central retail sprawl in the western United States, UrbanStudies, 39, pp. 1307-1327.
