Suchergebnisse

States and localities continue moving towards consumption taxes. Georgia's local governments displace a portion of their property tax receipts with revenue from the Local Option Sales Tax. This paper employs a panel dataset of Georgia counties across two economic cycles to examine the effects of consumption taxes on the long- and short-run volatility of local own-source revenues. We offer a mean-variance approach for considering correct revenue portfolio shares across tax-instruments. Holding revenues constant we find that permanent substitution towards a consumption tax amplifies variability of own-source revenues, implying that consumption taxes are overweighed in current revenue portfolios.