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Does state tax reciprocity affect interstate commuting? Evidence from a natural experiment

Regional Science and Urban Economics, ISSN: 0166-0462, Vol: 102, Page: 103923
2023
  • 1
    Citations
  • 0
    Usage
  • 19
    Captures
  • 2
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    1
  • Captures
    19
  • Mentions
    2
    • Blog Mentions
      1
      • Blog
        1
    • News Mentions
      1
      • 1

Most Recent News

New Findings Reported from University of Louisiana Lafayette Describe Advances in Economics (Does State Tax Reciprocity Affect Interstate Commuting? Evidence From a Natural Experiment)

2024 FEB 28 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Data detailed on Economics have been presented.

Article Description

This paper exploits the 2010 dissolution of the personal income tax reciprocity agreement between Minnesota and Wisconsin to estimate how state tax policies affect interstate commuting. This policy shock increased tax liability for some commuters and tax compliance costs for all commuters. Using a synthetic control approach designed for panel data, we compare the interstate commuting behavior of Wisconsinites and Minnesotans to unaffected intrastate commuters who live and work in the same state, intrastate commuters who live in other large metro areas, and several multi-state metro areas in other states where income tax reciprocity remained intact. Post-dissolution, we find robust evidence that the number of interstate commuters in Wisconsin border counties falls between 3 and 5%, with stronger declines found for younger and middle-income workers.

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