Do Higher Taxes Hurt GSP? The relationship between taxations and GSP
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We present the empirical analysis of the possible impact on the levels in nominal gross state product per capita, by comparing the tax regimes of the 50 States in the United States. We rely principally on five types of taxes: general sales and gross receipts taxes, individual income taxes, corporation net income taxes, severance taxes and documentary and stock transfer taxes as well as unemployment rate, which we think has non-negligible influence on GSP. For convenience, we use pooled cross-section data in our regression analysis to reduce the error and capture the possible relationship within our models. According to the estimates we have for both models, the total tax is positively related to GSP, while basically all five types of specific taxes are negatively related. What’s more, the results show that all variables are, maybe not individually, statistically significant.