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A primer on state and local tax policy: Trade-offs among tax instruments

The choice of tax instruments by a state or local government has wide-ranging implications for the economy, and the amount of revenue to be raised should not be the sole criterion used in developing tax policy. The trade-offs between various tax instruments, including revenue, fairness, and collection cost, should all be incorporated in these decisions.

In a new study for the Mercatus Center at George Mason University, Justin M. Ross defines five criteria for evaluating tax policy and uses them to give a clear overview of the different types of taxes utilized by state and local governments.