state revenue

The authors consider the role of tax policy in shaping incentives for venture capital (VC) support of young firms, focusing on the effects of capital gains taxes and investment subsidies. They also examine the effects of introducing a uniform capital gains tax on both entrepreneurs and VCs.

The paper provides a conceptual review of how the impact of taxes on the incentive to invest in the corporate sector can be measured, focusing on measures derived from economic theory. Two measures are derived -- effective marginal and average tax rates -- which reflect different forms of investment decisions.

The author explains that many believe the New Markets Tax Credit Program, which aims to stimulate $15 billion in private equity investment in low-income communities, can provide such a conduit. While the program has many strengths, it is still too early to tell whether it will live up to its promise because the initial investments are just beginning to unfold.

The paper proposes a parsimonious methodology to evaluate the impact of large urban renewal projects on public revenues. The impact is largely endogenous, external to projects and may encompass a broad range of instruments, ranging from local to regional to central governments.

This paper analyzes the choice of taxes and international information exchange by governments in a capital tax competition model. It explains situations where countries can choose tax rates on tax savings income and exchange information about the domestic savings of foreigners, implying that the decentralized equilibrium is efficient. It is shown that the recent development in information exchange treaties may not be useful to overcome the inefficiencies caused by decentralized tax setting.

The working paper by the National Bureau of Economic Research concludes that lowering personal tax rates in most cases appears to discourage entrepreneurial activity. The study finds that a reduction of 5 percent in the corporate tax rate correlates with a doubling of entrepreneurial activity. On the other hand, if personal income tax rates were reduced across the board by 5 percent, a 30 percent decrease in entrepreneurial activity follows.

The most recent edition of the Federal Reserve Research Roundup (3rd Quarter, 2001) includes a timely review of a recent working paper from the Federal Reserve Bank in Boston that looks at the relationship between corporate investment decisions and state and local taxes.

The report from the Rhode Island Tax Policy for Success recommends eliminating all state taxes on long-term capital gains and providing incentives to encourage biotech start-ups and investment. The report identifies four specific recommendations for the state to consider to encourage high-wage.

The study begins with an assessment of the national economy and its prospects under different assumptions that will influence the outlook. Regional economic conditions and prospects are then considered and the report concludes with an examination of the outlook for state tax revenues.

The General Accounting Office (GAO) report forecasts revenue losses for state and local governments ranging between one and eight percent by as soon as 2003. Internet sales will account for an increasing share of remote sales and may account for as much as 60 percent of the lost revenues in the GAOs most dire scenario of the report.