There is relatively little research on whether city business tax
structures either attract or repel business activity. Using very precise
establishment-level data, the study examines the economic impacts of
such taxes on all U.S. cities with populations over 40 thousand. Results
indicate that activity-based city business taxes and sales taxes had
statistically significant effects on the growths of business
establishments and their related employment.
This is the first study to document overall business taxes paid by firms
in U.S. cities. This is also the first study to show that higher levels
of such city business taxes reduce employment and the number of
establishments in U.S. cities.
Taxation, Employment, Establishments, City, Business, Policy.
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This study received no specific financial support.
The author declares that there are no conflicts of interests regarding the publication of this paper.