A four-equation regional econometric model was developed to explain the
effects of local government taxes and expenditures on personal income. The
model was used to derive "balanced-budget" tax multipliers for each of 64
counties in Pennsylvania. The analysis shows that a 20% taxcut would result in
net losses in personal income in 48 of these counties. The relative gain or loss in
income is related to regional characteristics such as income, income distribu
tion, revenue sources, and growth rates. The results do not provide much
encouragement for proponents of "supply-side" economic policies.
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