The Department of Business and Management Science and NoCeT invite you to an online faculty seminar with Caroline Weber, University of Kentucky.
Getting into the Weeds of Tax Invariance
We provide the first general empirical test of tax invariance (TIV). When a 25 percent tax remitted by manufacturers was eliminated in Washington state and the retail cannabis excise tax was simultaneously increased from 25 to 37 percent—a shift intended to be revenue-neutral—TIV did not hold.
Manufacturers kept two-thirds of their tax savings instead of passing all their savings through to retail firms via lower prices as predicted by TIV. One-third of the retail tax increase was passed on to consumers via higher retail prices – TIV would have predicted constant or even declining tax-inclusive retail prices.