State Parties and Taxes: A Comment on Reed in the Context of Close Legislatures

Abstract

This note empirically analyzes how partisan control of a state's legislature alters the growth of the state's tax burden. Using two related empirical strategies, one based on instrumental variables using closely controlled legislatures and one based on regression discontinuity, I find large effects of partisan control, between two and four times as large as similar estimates by Reed (2006). Compared to Republican control, Democratic control of the legislature causes tax burden growth of more than a full percent point over a 5-year period, on a mean tax burden of about 10.7 percentage points. This difference is strong evidence for partisan divergence in this context.