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Sales taxes and prices: an empirical analysis

Besley, Timothy and Rosen, H. (1999) Sales taxes and prices: an empirical analysis. National Tax Journal, 52 (2). pp. 157-178. ISSN 0028-0283

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We employ a unique data source to examine the incidence of sales taxes. The main idea is to take information on the prices of specific commodities in different U.S. cities and to examine the extent to which differences in tax rates and bases are reflected in prices, controlling for other factors (such as costs). We find a surprising variety of shifting patterns. For some commodities, the after-tax price increases by exactly the amount of the tax, a result consistent with the standard competitive model. However, taxes on other commodities are overshifted--an increase in tax revenueof one dollar per unit increases the price by more than one dollar.

Item Type: Article
Official URL:
Additional Information: © 1999 National Tax Journal
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
Date Deposited: 13 Feb 2010 13:03
Last Modified: 17 May 2022 23:07

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