Charles E. Scott

Recent Trends in Undergraduate Economics Degrees

Trends are provided in economics majors as reflected in undergraduate degrees awarded. A recent decline in these trends is demonstrated.

Sales tax equity: Who bears the burden?

The sales tax is assumed to be regressive as those with higher incomes spend a smaller portion of their incomes. This conclusion is based on the presumption that the sales tax is a broad-based consumer tax and that consumers bear the burden of the tax. In practice, the tax is neither broad-based nor the burden limited to consumers. In this paper, we evaluate the effect of the prior assumptions on sales tax incidence estimates and the robustness of the prior conclusions about sales tax incidence.

Prison's Dilemma: Do Education and Jobs Programmes Affect Recidivism?

This paper employs a hazard model to analyse the impact of education and two types of prison employment programmes on recidivism over a ten-year period for 4515 prisoners released from Ohio prisons in 1992. Estimations with a Weibull mixture model and propensity score approach provide two means for investigating self-selection bias. Selection bias is detected for participation in the most common prison job programme but has little effect on estimated marginal savings impacts of prison industry and education programmes. Estimates of the cost savings from postponing return to prison due to programme participation are provided. The potential for cost savings through decreasing or delaying return to prison is an important finding given the substantial and increasing cost of incarceration.

Statutory changes in state income taxes: An indirect test of fiscal illusion

Empirical studies of fiscal illusion have focused on the relationship between tax structure and government revenue or tax structure and the growth of government revenue. The premise is that tax structures which tend to conceal revenue sources are prone to fiscal illusion and should therefore have a positive effect on tax revenue. Unfortunately the results of these studies can at best only be characterized as mixed. For example, Oates (1975) and Craig and Heins (1980) found a significant and positive relationship between tax elasticity and government revenue at the state and city level, while DiLorenzo (1982) found a negative relationship between tax elasticity and tax revenue for county governments. These contradictory findings may be in part the result of attempts to isolate the effects of fiscal illusion on the very complicated political process of setting and passing government budgets. In this paper we propose a voting model as an alternative to fiscal illusion as an explanation of the relationship between income elastic taxes and tax revenue. The premise is simple; the effect of rising nominal income on progressive income taxes is that the individuals real tax burden rises as the growth of real disposable income falls. The more progressive the income tax system the more pronounced this effect. Should the growth in real taxes exceed the individuals increased demand for public goods a tax cut would be demanded. However, there is a positive cost for the individual of informing the government of the desired tax cut and spending reduction. It is only when the value of the increased disposable income exceeds the cost of securing the tax cut that voters will petition for a tax reduction. We test the elasticity hypothesis by estimating the effect of income tax progressivity on the probability of a state enacting a statutory income tax reduction. Fiscal

Interstate Differences in Individual Income Taxes

Income taxes vary significantly across states. Typical measures of these varia-tions utilize aggregate measures, such as per capita taxes or taxes per thousand dollars of income. In this article the income tax systems, as opposed to the taxes paid, are described and compared for the various states. It is demonstrated that the diversity in the treatment of individuals for income tax purposes is vast. We propose that analysis of state taxation and its effect on individuals and businesses be conducted on a disaggregated basis.

“Fair Trade,” Market Failures, and (the Absence of) Institutions

This paper presents an analysis of Fair Trade using a general equilibrium model of an economy where externalities are present and where the institutional or legal framework needed to regulate these externalities may be weak. Weak institutions and externalities are common in the developing world, where Fair Trade is targeted, making perfect competition models inappropriate measures of the value of Fair Trade. Members of Fair Trade cooperatives are required to adopt sustainable production methods, and not employ other socially harmful practices such as child-labor. Thus, Fair Trade organizations can serve as a complement to the existing weak institutions in the economy, creating incentives for entrepreneurs to move from the informal to the formal sector. Specifically, the analysis confirms that in many cases an increase in the Fair Trade premium can reduce the overall level of harmful activities, even from those producers who are not Fair Trade certified, and thereby raise welfare.

Labor Effects on the Unskilled Labor Market

This paper provides the first analytical estimates of the impact of prison labor on the market for non-prison, unskilled labor. Estimates of the impact of prison labor on employment and wages of non-prison employees are derived using a supply and demand model similar to that used in the immigration literature, and generally accepted estimates of the aggregate demand and supply elasticities. Our results suggest minimal impact, given the current level of prison employment, and even with a significant expansion to twenty five percent of all prisoners.

Businesses and the Incidence of Sales and Use Taxes

Sales taxes paid by businesses are buried in production costs and therefore hidden from consumers and policymakers. Final (tax included) prices are related to the number of taxable transactions that the good has undergone and who bears the tax as well as to resource costs. Thus the total sales tax embedded in final prices is obscured. This study investigates the level and the incidence of sales taxes applied to business transactions. An input-output model assuming a full pass forward of the tax is employed. The embedded sales tax is more regressive than the direct share paid by consumers and is found in most commodities including those exempted by legislation.

National health insurance: lessons from the United States experiment.

Medicares coverage of end-stage renal disease provides a 20-year experiment in national health insurance. Access, cost containment, and portability have been maintained while serious concerns have arisen over sustaining (and appraising) quality of care.

The Impact of Income Tax Progressivity On Tax Revenue

The possibility of a relationship between tax revenue and tax progressivity has been an issue of interest to both theorists and policymakers in recent years. Among the public choice theorists there is debate about the expected direction of association. The empirical results have also been mixed. In this article we discuss the theoretical foundations of this relationship and empirically test a resulting median voter model for state income tax receipts. The empirical findings support a negative relationship between state income tax receipts and the progressivity of their income tax system.