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West Virginia Tax Incidence
"Who pays the taxes?" is a fundamental question in discussions on the effects of taxation. Tax incidence is defined as the change in the distribution of economic welfare due to tax policy. Economists distinguish between "statutory" and "economic" incidence. The statutory incidence of a tax is on the taxpayer that is legally liable to remit the tax while the economic incidence of the tax is on the people that ultimately pay the tax.
The main objective of this project is to estimate the economic incidence of West Virginia state and local taxes. The initial stage of creating the required capacity to conduct an incidence study is completed. This stage included a review of tax revenue sources, organization and matching of main and supplemental datasets, and a survey of applied incidence methodologies. The long-term goal is to repeat this analysis every year to see the change in incidence in response to changes in the state tax code and state economy.
