One of the ways the U.S. Congress and state legislatures allocate government resources is through the use of tax expenditures (TEs) that allow certain taxpayers to reduce tax liabilities by taking deductions, exemptions, credits, etc. Calls to report tax expenditures and integrate analysis of them into the budget process led to the production of a tax expenditure budget (TEB) at the federal level in 1968. Since then the policy has diffused at the state level and as of 2011, 45 states have produced some type of TEB while 38 states have required them. Tax expenditures have recently become a common topic in fiscal and economic discussions at the federal and state levels as an option policymakers have to cut budgets and/or reduce the deficit (at the federal level).
Existing theories regarding the motivations for state tax expenditure reporting through a TEB have not been empirically tested. This dissertation draws on the state policymaking innovation and diffusion literature to examine the determinants of adoption of state TEBs, and assembles data from over forty years into a time series-cross section of the fifty states in order to quantitatively answer the questions laid out in the study. Event History Analysis, specifically the Cox Proportional Hazards Method, is used to test the probability that a set of internal and external factors affects the likelihood of state adoption of TEBs.
The results contribute to a better understanding of what leads some states to report tax expenditures in a TEB while others have not. In particular, poor fiscal health, divided government, and legislative professionalism were variables found to have a statistically significant and positive impact on the likelihood to adopt a TEB, among other findings. These findings support the classification of a TEB as a transparency policy, and offer empirical evidence that the determinants of transparency policies may differ from those of traditional policies. This research contributes to the literatures on state tax expenditure reporting, state fiscal transparency, state policy adoption, and the use of event history analysis as a method of modeling policy adoption.
|Commitee:||Brunori, David, Joyce, Philip, Phaup, Marvin, Wolman, Hal|
|School:||The George Washington University|
|Department:||Public Policy and Public Administration|
|School Location:||United States -- District of Columbia|
|Source:||DAI-A 73/07(E), Dissertation Abstracts International|
|Subjects:||Political science, Public administration, Public policy|
|Keywords:||Event history analysis, Fiscal transparency, Innovation, Innovation and diffusion, Tax expenditure, Tax expenditure budgets, Tax expenditure reporting|
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