Democrats, Republicans, and Taxes

I estimate the influence of political parties on state Tax Burdens over a forty-year period (1960-2000). Holding constant a large number of state and voter characteristic variables, I find that: (i) Tax Burdens are higher when Democrats control the state legislature compared to when Republicans are in control. (ii) The political party of the governor has little effect after controlling for partisan influences in the state legislature. I explain how both findings are consistent with median voter theory. My results suggest that after five years of Democratic control of the legislature, state government would be approximately 3 to 5 percent larger than if Republicans controlled the legislature during that same period, with the better specifications producing estimates in the higher end of this range. JEL Classifications: H1, H2 Revised, August 18, 2004 * Professor, Department of Economics, University of Oklahoma, Norman, OK, 73019; [email protected]; http://faculty-staff.ou.edu/R/William.R.Reed-1. I thank Jim Alt, Kevin Grier, Jim Poterba, and Dan Sutter for helpful comments; and Kodrat Wibowo for able research assistance.