Publications

Planning for Prosperity: What Can Seattle Learn from Economic Research on Transportation, Affordable Housing and Local Economic Development?
July 2013
by Andrew Chamberlain

Abstract
We briefly survey the academic literature in three public policy areas: transportation, affordable housing, and local economic development. Based on our review of the literature, we summarize key policy lessons for Seattle lawmakers who are currently facing challenges in each of these policy areas. This brief was prepared for the 2013 Albert Shen for Seattle City Council campaign.

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Federal Aid or Fiscal Burden? Estimating the Impact of Federal Intergovernmental Grants on the State of North Dakota
December 2012
by Andrew Chamberlain, Patrick Fleenor and Michael Wither

Abstract
We examine the fiscal and regulatory impact of growing federal aid on states with an emphasis on North Dakota. Using a 30-year panel of grants and taxes we provide new econometric estimates of the impact of federal aid on state budgets. We find strong evidence federal aid results in upward “ratcheting” of state spending and taxes. Each $1 of grants predicts state tax increases of between $0.221 and $0.274 in the long run, primarily state personal and corporate income taxes and general sales taxes. These findings are robust to a variety of econometric specifications. We also provide four detailed case studies of the impact of accompanying federal grant regulations on local control of North Dakota policy: transportation policy; education; Medicaid; and land and resource use. States considering whether to increase their reliance on federal intergovernmental aid should be aware of these long-term fiscal and regulatory consequences of federal grants-in-aid.

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Methodology Paper: Developing Symmetric U.S. Input-Output Tables from Rectangular B.E.A. Make and Use Data
February 2011

by Andrew Chamberlain

Abstract
Rather than producing traditional “square” input-output tables, the U.S. Bureau of Economic Analysis (BEA) produces rectangular “use” and “make” tables. This memo outlines the analytical methods and data sources used to develop Columbia Economics, L.L.C.’s U.S. Input-Output Tables, based on data from the most recent 2002 benchmark input-output accounts.

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“Paying for the ‘American Power Act’: An Economic and Distributional Analysis of the Kerry-Lieberman Cap-and-Trade Bill”
Revised: August 2010
by Andrew Chamberlain and Feliz M. Ventura

Abstract
The “American Power Act” proposed by Sen. John Kerry and Sen. Joseph Lieberman would establish a broad-based U.S. cap-and-trade system. Using an input-output model we estimate the distributional cost of the cap-and-trade portions of the bill to households by income, age group, U.S. region and family type, as well as the value of various industry subsidies granted by the bill. In a typical year (2020), households would face a gross annual burden of $125.9 billion per year or $1,042 per household, with costs disproportionately borne by low-income households. On a net basis, the large quantity of allowances distributed freely to companies leads households in the top income quintile to benefit financially, redistributing to these households roughly $12.3 billion per year from the bottom 80 percent of earners. Finally, we explore two theoretical issues: (1) we offer microeconomic evidence that shareholders rather than households are most likely to benefit from the bill’s free allowances to electricity and natural gas utilities; and (2) we show how the bill’s exclusion of petroleum refiners from quarterly auctions reduces efficiency by introducing a source of additional systematic price volatility at quarterly auctions.

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“Industry Profits, Stock Prices and Household Burdens: A Distributional Analysis of the Kerry-Boxer Cap-and-Trade Bill”
March 2010
by Andrew Chamberlain and Feliz M. Ventura

Abstract
Using an input-output model of the U.S. economy, we estimate the distributional impact of the “Clean Energy Jobs and American Power Act” (S. 1733) on short-run profits and stock prices of a representative sample of electricity, natural gas, and petroleum refining firms, and the long-run impact on U.S. households. We find the bill significantly increases profits for electricity and natural gas distributors, raising stock prices by up to 34 percent in some scenarios. By contrast, profits for petroleum refiners would fall sharply with large and mid-sized refiners losing up to 82 percent of stock value. For households, we estimate the bill would impose a gross burden of $113.8 billion per year or $947 per household, ranging from 4.4 percent of income for low-income households to 1.0 percent for upper-income households. These costs would fall disproportionately on families under age 25 and over 75, those in Midwestern states, and single parents with dependent children.

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Who Pays for Climate Policy? New Estimates of the Household Burden and Economic Impact of a U.S. Cap-and-Trade System
March 2009
by Andrew Chamberlain

Abstract
Many U.S. lawmakers view cap and trade as a politically superior non-tax approach to climate policy. However, cap and trade imposes identical economic burdens on households to a similarly designed carbon tax. Using the newly-released 2002 input-output accounts we present new estimates of the distributional impact of a typical cap-and-trade system by income, age, U.S. region and family type. In total, households would face an annual burden of roughly $144.8 billion per year with costs disproportionately borne by low-income households, those under age 25 and over 75 years, those in Southern states, and single parents with dependent children. Lawmakers weighing the costs and benefits of climate policy should be aware that cap and trade would impose a significant and regressive annual burden on U.S. households.

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Core Concepts: The Economics of Tax Incidence
December 2008
by Andrew Chamberlain

Abstract
Tax incidence is a fundamental concept underlying tax modeling and the economic analysis of tax policy. This article provides a brief overview of key theoretical concepts related to tax incidence, and how they are derived analytically from simple models of price elasticity of supply and demand in the marketplace.

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City of Seattle Street Use Cost Center Rate Study
May 2008
by Andrew Chamberlain

Abstract
This study develops the 2009-10 rate proposal for the Seattle Department of Transportation’s Street Use cost center. The structure of the cost center, sources of data, and basis for various forecasts are explained in detail. This paper was prepared as part of the city’s biennial rate adjustment process for right-of-way permit fees and charges.

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Estimating Federal Tax Burdens for Major City Areas, Counties, and U.S. Congressional Districts
March 2007
by Andrew Chamberlain and Gerald Prante

Abstract
The burden of federal taxes does not fall equally on the cities, counties and congressional districts that comprise the geographic landscape of the United States. Because tax collections figures provide little information about the true economic burden of taxes, researchers must employ various statistical methods to estimate the economic incidence of federal taxes across geographic areas. We outline a detailed methodology for modeling the burden of each federal tax – individual income, corporate income, payroll, estate and gift, and all excises – by narrow geographic areas. Using this model, we provide estimates of federal tax burdens by three geographic areas for Calendar Year 2004: major city area, county and U.S. congressional district.

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Who Pays Taxes and Who Receives Government Spending? An Analysis of Federal, State and Local Tax and Spending Distributions, 1991-2004
March 2007
by Andrew Chamberlain and Gerald Prante

Abstract
While the U.S. tax system is progressive, the distribution of government spending makes the overall fiscal system more progressive than is apparent from tax distributions alone. Using a microdata model we estimate the distribution of federal, state and local taxes and spending between 1991 and 2004. We find households in the lowest quintile of income received roughly $8.21 in federal, state and local government spending for every dollar of taxes paid in 2004, while households in the middle quintile received $1.30, and households in the top quintile received $0.41. Overall, tax payments exceeded government spending received for the top two quintiles of income, resulting in a net fiscal transfer of between $1.031 trillion and $1.527 trillion between quintiles. Both taxes and spending appear to have large distributional effects on households, and these effects have grown since 1991. The results suggest tax distributions alone are an inadequate measure of progressivity, and policymakers should examine both tax and spending distributions when judging the overall fairness of policy toward income groups.

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2007 Annual Survey of U.S. Attitudes on Taxes and Wealth
April 2007
by Andrew Chamberlain

Abstract
This report summarizes the findings of our third annual survey of U.S. opinions on taxes. All results are based on a Harris Interactive® survey conducted on behalf of the Tax Foundation between March 5 and 12, 2007. The survey covers a nationwide cross section of 2,012 U.S. adults aged 18 or older. All data from this and previous years’ surveys are available for download free of charge at http://www.taxfoundation.org under “Public Opinion Surveys on Taxes.”

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Generational Equity: Which Age Groups Pay More Tax, and Which Receive More Government Spending?
June 2007
by Andrew Chamberlain and Gerald Prante

Abstract
As America’s growing number of retirees strains the nation’s fiscal system, the question of which age groups benefit most from federal policy has become more important than ever. Using a standard fiscal incidence model we find that America’s youngest households aged 25 and under received $2.32 in government spending for each dollar of taxes paid in 2004. Middle-aged households aged 45 to 54 received $0.73 per tax dollar, and America’s oldest households aged 75 and over received $4.93 per dollar of taxes paid. Over a lifetime, government spending follows a U-shaped pattern, with large education and welfare spending in youth and large Social Security and Medicare payments in old age. But even within each age group, there are large differences in taxes and government spending across households at different income levels.

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