The Determinants of Median Voter Tax Liability: an Empirical Test of the Fiscal Illusion Hypothesis

Abstract

A median voter model was constructed, permitting an empirical examination of the determinants of state and local individual tax liability. Holding constant the effect of other factors, a 1% increase in median voter income is found to increase median voter tax liability by 1.4%. A rise in per capita mineral shipments and thus, an increase in the available mineral extraction tax base lead to reduction in voter tax liability. Also, support is found for the version of the fiscal illusion hypothesis that the level of taxation increases as tax structures become more complex by drawing upon a larger number of revenue sources.