Working Paper: NBER ID: w2107
Authors: Rich Jones; John Whalley
Abstract: This paper reports on an applied general equilibrium regional model for Canada which is used to investigate the regional effects of taxes. Earlier, literature on regional tax effects is reviewed and the main features of the model are briefly described. Existing literature on regional tax effects is largely non-quantitative, and does not discuss several important regional features of taxes, such as taxes which are predominantly on products or industries located in particular regions. Results suggest that regional effects of taxes can be significant, and in the Canadian case at least, do not tend to counterbalance one another. In general, richer regions tend to lose and poorer regions gain from federal taxes, but other regional characteristics such as manufacturing/non-manufacturing, or resource/non-resource can be important.
Keywords: Applied General Equilibrium; Regional Tax Effects; Canada
JEL Codes: H21; H71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Federal tax policies (H29) | Economic benefits for poorer regions (R11) |
| Federal tax policies (H29) | Losses for wealthier regions (R11) |
| Provincial taxes (H29) | Benefits for larger regions (R12) |
| Federal taxes (H29) | Redistribution of income from richer to poorer regions (H23) |
| Federal taxes (H29) | Interregional redistribution system (R10) |
| Federal taxes (H29) | Offset impacts of other federal policies (H59) |