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Evolution of Excise Taxation in the USA Since the Great Recession

PFM, Vol. 17 No. 3, (2017)

The most drastic crisis since the Great Depression put a significant amount of stress on states’ revenues. Within the existing framework of taxation systems’, an increasing amount of attention from academics and politicians alike concentrates on public revenues from sales and use taxation. Such increased attention is not surprising as revenues from general sales taxes and ex-cise taxation are the dominant group of revenues from own tax sources for states.

The article’s first contribution is that it shows the evolution of the structure of actual state revenues by sources of these revenues. The manuscript then describes the topology of excise taxes by object of taxation (i.e. fuel taxes, alcohol taxes, and tobacco taxes). The second contribution of this paper stems from its detailed data on excises. We find that no-PIT states generate around 20% of their tax revenues from excises while PIT-states generate only 16.5%. The main difference is not in rates.

The manuscript starts with the description of the evolution of states’ own revenues. The next section covers the period between 2005 and 2015. We concentrate exclusively on excises’ reve-nues. This section is followed by the presentation of excise rates. We conclude our manuscript with recommendations for policy changes.

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