Interstate differences in expenditures and effective tax rates are examined to see
whether the pattern of differences has changed substantially over the past 25 years.
The results show that there has been only very modest convergence of per capita
expenditures and increased variation of effective tax rates. The pattern of state fiscal
behavior is remarkably stable. However, by 1987, the variation in both fiscal
measures was greater than expected, given the changes in interstate differences in
economic conditions over this period.
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