Incidence and Allocation Effects of a State Fiscal Policy Shift: The Florio Initiatives in New Jersey

45 Pages Posted: 2 Jun 2011 Last revised: 2 Dec 2022

See all articles by William T. Bogart

William T. Bogart

York College of Pennsylvania

William T. Bogart

National Bureau of Economic Research (NBER)

David F. Bradford

Princeton University, Woodrow Wilson School; NBER; CESifo (Center for Economic Studies and Ifo Institute)

Michael Williams

affiliation not provided to SSRN

Date Written: October 1992

Abstract

We calculate the incidence of recent changes to the New Jersey state tax system on a sample of homeowners. Our analysis distinguishes between business-as-usual responses to an evolving fiscal situation and tax changes that constitute a surprise. The latter have incidence effects; the former do not. We conclude that, if the changes carried out by NJ Governor Jim Florio are regarded as permanent, they effected a one-time wealth redistribution from, on average, higher-income homeowners toward lower-income homeowners and from owners of suburban residential property toward owners of urban residential property. Although effects on the averages for identifiable groups are clear and significant there is very considerable variation in the effects on individual homeowners within groups. We also estimate the allocation effects of the tax changes using a general equilibrium model that incorporates the option of in-and out migration. The results suggest that the changes will induce a sizable migration of weal thy and high-income people out of the state.

Suggested Citation

Bogart, William T. and Bogart, William T. and Bradford, David F. and Williams, Michael G., Incidence and Allocation Effects of a State Fiscal Policy Shift: The Florio Initiatives in New Jersey (October 1992). NBER Working Paper No. w4177, Available at SSRN: https://ssrn.com/abstract=1856940

William T. Bogart (Contact Author)

York College of Pennsylvania ( email )

York, PA 17405-7199
United States
717-815-1231 (Phone)

William T. Bogart

National Bureau of Economic Research (NBER)

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David F. Bradford

Princeton University, Woodrow Wilson School ( email )

Department of Economics
Princeton, NJ 08544-1021
United States
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NBER

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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

HOME PAGE: http://www.CESifo.de

Michael G. Williams

affiliation not provided to SSRN

No Address Available

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