Tradeoffs between Local Taxes and Government Spending as Determinants of Business Location*
Year: 2004
Type: article
Abstract: . This paper investigates the effects of local fiscal policy on the location decisions of 3,763 establishments that began operations in Maine between 1993 and 1995. Empirical results, estimated from Poisson and negative binomial regression models, indicate that businesses favor municipalities that spend high amounts on public goods and services, even when these expenditures are financed by an increase in local taxes. This suggests that a local fiscal policy of reduced government spending, to balance a tax cut, may attract fewer new businesses than a policy featuring additional spending and higher taxes.
Source: Journal of Regional Science
Authors: Todd M. Gabe, Kathleen P. Bell
Institution: University of Maine
Language: English
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2000902033