The robust relationship between taxes and U.S. state income growth.

Time effects = 0 [chi square] = 301.00 [chi square] = 54.68

(p-value = 0.000) (p-value = 0.000)

(5)

Dep.

Variable =

DLNY DLNK -- DLNL -- DLNN -- TaxBurden(D) -2.5925

(-4.31) TiexBurden(L) -1.5571

(-2.15) [R.sup.2] 0.528 SIC 1043.76 AICc 1156.85 Observations 288 Hypothesis Tests

State effects = 0 [chi square] = 60.99

(p-value = 0.083)

Time effects = 0 [chi square] = 194.79

(p-value = 0.000) Note: Coefficients are estimated using OLS. t-statistics are reported in parentheses and are calculated using White heteroscedasticity-robust standard errors. All equations include state and time fixed effects. AICc denotes the "corrected" version of the AIC. Summary statistics for each of the variables are reported in the Appendix. TABLE 2 LIST OF POTENTIAL CONTROL VARIABLES

Selected Studies Which

Have Used This or a Variable Description Related Variable Education Percent of population Wasylenko and McGuire

(aged 25 and up) who (1985); Garcia-Mila and

have completed college McGuire (1992); Crown and

(source: Census) Wheat (1995); Phillips

and Goss (1995);

Dalenberg and Partridge

(1995); Partridge and

Rickman (1996); Clark and

Murphy (1996); Ciccone

and Hall (1996); Crain

and Lee (1999) Working Percent of population Wasylenko and McGuire population between 20 and 64 years (1985); Mofidi and Stone

of age (source: Census) (1990); Dalenberg and

Partridge (1995); Crain

and Lee (1999) Nonwhite Percent of population Mofidi and Stone (1990);

that is nonwhite (source: Partridge and Rickman

Census) (1996); Crain and Lee

(1999) Female Percent of population Mofidi and Stone (1990);

that is female (source: Partridge and Rickman

Census) (1996); Clark and Murphy

(1996) Population Log of total population Ciccone and Hall (1996);

(source: Census) Alm and Rogers (2005) Population Population density Wasylenko and McGuire density (source: Census) (1985); Carroll and

Wasyenko (1994); Clark

and Murphy (1996);

Ciccone and Hall (1996);

Crain and Lee (1999) Urban Percent of population Holtz-Eakin (1993);

living in urban areas Partridge and Rickman

(source: Census) (1996); Crain and Lee

(1999) Agriculture Share of total earnings Crown and Wheat (1995);

earned in "Farm" and Caselli and Coleman

"Other Agriculture" (2001)

industries (source: BEA) Manufacturing Share of total earnings Crown and Wheat (1995);

earned in "Manufacturing" Crain and Lee (1999);

industries (source: BEA) Caselli and Coleman

(2001); Stansel (2005) Service Share of total earnings Clark and Murphy (1996)

earned in "Service"

industries (source: BEA) Mining Share of total earnings Holtz-Eakin (1993); Crown

earned in "Mining" and Wheat (1995); Clark

industries (source: BEA) and Murphy (1996);

Mitchener and McLean

(2003) Union Percent of Plaut and Pluta (1983);

nonagricultural wage and Mofidi and Stone (1990);

salary employees who are Dalenberg and Partridge

union members (source: (1995); Phillips and Goss

Hirsch, McPherson, and (1995); Partridge and

Vroman, 2001) Rickman (1996); Clark

and Murphy (1996) Diversity A measure of industrial Mofidi and Stone (1990);

diversity, Garcia-Mila and McGuire

(1993); Partridge and

Diversity = [summation Rickman (1996); Crain

over (i)][(Earnings and Lee (1999)

[Industry.sub.i]/Total

Earnings).sup.2]

(source: BEA) Note: This table is excerpted from Reed (2008). TABLE 3 ROBUSTNESS CHECK ACROSS ALTERNATIVE SPECIFICATIONS

(1) (2) (3)

All Best SIC Best AICc Variable Name (1) D/L Variables Specification Specification Tax burden D -0.4240 -0.5470 -0.5368

(-2.58) (-3.59) (-3.36)

L -0.5838 -0.6905 -0.7045

(-2.87) (-3.20) (-3.39) Education D 1.2504 1.4766 1.1673

(1.99) (2.44) (2.00)

L 1.2759 1.1221 1.2004

(6.84) (8.65) (7.06) Working population D 1.3235 1.6503 1.3508

(3.51) (4.75) (4.21)

L 0.9789 1.1264 1.0405

(4.42) (5.66) (4.89) Nonwhite D 1.1447 1.2900 1.0064

(2.27) (2.87) (2.20)

L -0.2699 -- -0.3633

(-1.77) (-2.83) Female D -2.7097 -3.4947 -3.463

(-1.97) (-2.92) (-2.92)

L 0.3608 -- --

(0.46) Population L 2.8954 4.0213 --

(1.50) (3.19) Population density D 0.0300 -- --

(0.74)

L 0.0217 -- 0.0269

(1.64) (2.39) Urban D -0.1486 -- --

(-1.32)

L (0.0674 -- --

(-0.94) Agriculture D 0.5333 0.5365 0.5272

(4.19) (5.82) (5.08)

L 0.3413 0.3881 0.4084

(3.03) (5.54) (6.03) Manufacturing D -0.0218 -- --

(-0.13)

L -0.0304 -- --

(-0.25) Service D 0.0397 -- --

(0.16)

L -0.3083 -- -0.2956

(-1.90) (-2.57) Mining D -0.6314 -0.5724 -0.5032

(-2.72) (-2.95) (-2.50)

L -0.3006 -- --

(-1.58) Union D 0.1240 0.1143 0.1251

(1.86) (2.10) (2.37)

L 0.0182 -- --

(0.27) Diversity D 0.2591 -- 0.3241

(1.00) (1.57)

L -0.2144 -0.3495 --

(-1.02) (-2.26) LNY_1 -41.857 -39.783 -44.085