NIMBY Taxes Matter: The Case of State Hazardous Waste Disposal Taxes

    Abstract

    This paper links the theoretical and empirical literatures on interjurisdictional tax and regulatory competition, focusing on the case of state hazardous waste disposal taxes. It begins by demonstrating that locally set environmental taxes can be inefficient, and that the size of the inefficiency depends on the elasticity of polluters' responses to the local taxes. The paper then uses panel data from the Toxics Release Inventory on interstate waste shipments, combined with a set of state characteristics including disposal tax rates and disposal capacity, to estimate the magnitude of the tax elasticities, and to demonstrate the empirical relevance of the theoretical inefficiency of local taxes.


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