Howard Chernick Professor Emeritus of Economics

[Professor Emerita] Cordelia Reimers Professor Emerita of Economics, Hunter College and The CUNY Graduate Center; Ph.D., Economics, Columbia University, 1977.

Howard Chernick and Cordelia Reimers publish “Tax Structure and Revenue Instability: The Great Recession and the States” – IZA Journal of Labor Policy, forthcoming, 2014 (with Jennifer Tennant).

Abstract:

“Though the great recession has had the most severe overall effect on state tax revenues of any downturn since the Great Depression, impacts varied widely across states. Tax revenues were affected through two different channels. The first is due to the collapse in realized capital gains income following the sharp decline in the stock market. State tax bases are affected in proportion to pre-recession reliance on capital gains income, in turn closely associated with the degree of income concentration. Largely due to capital gains income, the income of high-income taxpayers is more cyclically sensitive than that of lower-income taxpayers. The second channel, the differential effect on state output and employment, has its greatest impact on incomes below the top 5 percent of the distribution. We hypothesize that variation in revenue impact across states is due to differences in the severity of the income shocks at different levels of income, the degree of income inequality, the importance of capital gains in top incomes, and the level and progressivity of tax burdens. Progressive states are likely to be more vulnerable to revenue losses in economic downturns. Progressivity and income volatility may interact to amplify the recession’s fiscal impact.”

Link to the article (PDF):

http://www.izajolp.com/content/pdf/2193-9004-3-3.pdf