Effects of State Sales Tax on GDP Per Capita: A Statewide Study for the United States
Satterfield, Kevin J.
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Economists have viewed the relationship between the impact of taxes on the GDP, however research dealing with the sales tax rate and the GDP have yet to be analyzed to the extent that income taxes have been investigated. In an effort to fill this void, we examine how the state sales tax rate across all fifty states within the United States impact the corresponding state’s real GDP per capita. There will be a simple regression model along with additional multiple regressions to analyze the impact of the state sales tax rate on the state’s economy. As a result of this investigation, the R-squared value increased dramatically from the initial simple regression to the last multiple regression model, as well as the statistical significance of certain explanatory variables, including the state sales tax rate.