Why are grocery foods taxed in the United States? Theory and spatial evidence from multilevel government interactions

Lingxiao Wang; Yuqing Zheng

doi:10.1016/j.regsciurbeco.2023.103959

Why are grocery foods taxed in the United States? Theory and spatial evidence from multilevel government interactions

Lingxiao Wang, Yuqing Zheng

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

Grocery food sales taxes (or grocery taxes) in the United States are applied in the form of a state and/or county tax. To investigate how local governments establish these grocery taxes, we develop a dynamic gaming model to explain the county–county and county–state interactions regarding grocery taxes. Leveraging novel panel data on grocery taxes at county and state levels from 2006 to 2017, we estimate a dynamic spatial model including multilevel governments. The empirical evidence unveils three key spatial determinants that contribute to variations in county grocery tax rates. (1) A negative vertical impact from the home state, (2) a positive horizontal effect from neighboring counties, and (3) a positive diagonal effect from neighboring states.

Original language	English
Article number	103959
Journal	Regional Science and Urban Economics
Volume	104
DOIs	https://doi.org/10.1016/j.regsciurbeco.2023.103959
State	Published - Jan 2024

Bibliographical note

Publisher Copyright:
© 2023 Elsevier B.V.

Keywords

Commodity taxation
Grocery sales taxes
Multilevel government interaction
Spatial tax competition

ASJC Scopus subject areas

Economics and Econometrics
Urban Studies

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10.1016/j.regsciurbeco.2023.103959

Cite this

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title = "Why are grocery foods taxed in the United States? Theory and spatial evidence from multilevel government interactions",

abstract = "Grocery food sales taxes (or grocery taxes) in the United States are applied in the form of a state and/or county tax. To investigate how local governments establish these grocery taxes, we develop a dynamic gaming model to explain the county–county and county–state interactions regarding grocery taxes. Leveraging novel panel data on grocery taxes at county and state levels from 2006 to 2017, we estimate a dynamic spatial model including multilevel governments. The empirical evidence unveils three key spatial determinants that contribute to variations in county grocery tax rates. (1) A negative vertical impact from the home state, (2) a positive horizontal effect from neighboring counties, and (3) a positive diagonal effect from neighboring states.",

keywords = "Commodity taxation, Grocery sales taxes, Multilevel government interaction, Spatial tax competition",

author = "Lingxiao Wang and Yuqing Zheng",

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AU - Wang, Lingxiao

AU - Zheng, Yuqing

PY - 2024/1

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N2 - Grocery food sales taxes (or grocery taxes) in the United States are applied in the form of a state and/or county tax. To investigate how local governments establish these grocery taxes, we develop a dynamic gaming model to explain the county–county and county–state interactions regarding grocery taxes. Leveraging novel panel data on grocery taxes at county and state levels from 2006 to 2017, we estimate a dynamic spatial model including multilevel governments. The empirical evidence unveils three key spatial determinants that contribute to variations in county grocery tax rates. (1) A negative vertical impact from the home state, (2) a positive horizontal effect from neighboring counties, and (3) a positive diagonal effect from neighboring states.

AB - Grocery food sales taxes (or grocery taxes) in the United States are applied in the form of a state and/or county tax. To investigate how local governments establish these grocery taxes, we develop a dynamic gaming model to explain the county–county and county–state interactions regarding grocery taxes. Leveraging novel panel data on grocery taxes at county and state levels from 2006 to 2017, we estimate a dynamic spatial model including multilevel governments. The empirical evidence unveils three key spatial determinants that contribute to variations in county grocery tax rates. (1) A negative vertical impact from the home state, (2) a positive horizontal effect from neighboring counties, and (3) a positive diagonal effect from neighboring states.

KW - Commodity taxation

KW - Grocery sales taxes

KW - Multilevel government interaction

KW - Spatial tax competition

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DO - 10.1016/j.regsciurbeco.2023.103959

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VL - 104

JO - Regional Science and Urban Economics

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ER -

Why are grocery foods taxed in the United States? Theory and spatial evidence from multilevel government interactions

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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