The adequacy of state and local taxes and business location

For many states, tax structures have become less adequate in recent years as larger proportions of their tax revenues are raised by sales and excise taxes, which generally have elasticities of less than one. Furthermore, tax reform, which is being demanded by some taxpayer groups to provide property tax relief, is unlikely to improve the adequacy of the system even if the additional revenues are obtained from elastic tax sources. When reform is financed by increased sales and excise taxes, the structure will be less adequate.