Replication data for: Tax Innovation by American States: Capitalizing on Political Opportunity, 1992

We test five explanations of state tax innovation derived from the literature--economic development, fiscal health, election cycle, party control, and regional diffusion--using event history analysis, a pooled cross-sectional time-series technique. While little support is found for the economic development and party control explanations, our empirical results are highly consistent with a political opportunity explanation of state tax adoptions; (1) the presence of a long time until the next election, (2) the existence of a fiscal crisis, and (3) the presence of neighboring states that have previously adopted a tax all create opportunities for politicians to shield themselves from the political costs of supporting a tax increase and are all shown by empirical analysis to increase the probability of a tax adoption.

This empirical evidence is consistent across different tax instruments and different periods of analysis throughout the twentieth century.