We examine whether personal and business taxes are an important determinant of economic development in a metropolitan area. We estimate determinants of the location of private employment and population across the D.C. metropolitan area over the period 1969-94. After controlling for jurisdiction and time effects, we find that higher rates of two business taxes - sales and personal property - reduce annual employment growth by a significant amount. Higher levels of nonwelfare public service expenditures are estimated to increase employment growth. We do not find local property taxes to be a significant factor.
ASJC Scopus subject areas
- Economics and Econometrics