How Major Local Taxes Affect Private Employment

Abstract

This empirical research focuses on three major local taxes—property tax, sales tax, and telecommunications tax—to examine their impacts on local economic development in the six-county Chicago metropolitan area. The statistical results indicate that these three major local taxes have significant negative effects on business employment. The study implies that it may be counterproductive for local governments to raise tax levels in order to address some immediate revenue shortfalls in the aftermath of the recent economic recession.