Accessible Requires Authentication Published by De Gruyter June 9, 2021

Does the Strength of Incentives Matter for Elected Officials? A Look at Tax Collectors

Sutirtha Bagchi ORCID logo

Abstract

In Pennsylvania local property taxes are collected by elected officials, known as tax collectors, whose compensation varies widely in both structure and level across municipalities. This paper analyses the existence of a pay-performance relationship for these officials. Using data on the percentage of property taxes that are actually collected at the municipal level, the paper finds that as the compensation tax collectors receive goes up, they collect more in taxes. This relationship is however true only for collectors who are compensated on a commission basis and not for collectors compensated on the basis of a flat salary.


Corresponding author: Sutirtha Bagchi, Department of Economics, Villanova University, Villanova, PA, USA, E-mail:

Acknowledgments

I thank Gerald Cross of the Pennsylvania Economy League for sharing survey data on compensation of tax collectors, Sharon Bogden of the Department of General Services of Pennsylvania and Rhonda R. Newton of the Pennsylvania Heritage Foundation for help in obtaining issues of the Pennsylvania Manual, Joan Youngman of the Lincoln Institute of Land Policy for providing data on escrow, and Maya Grimm, Lily Murray, and Jyotasna Yadav for research assistance. I also thank (without implicating) Nathan Anderson, Sebastien Bradley, Suzanne Clain, Joshua Hall, Andrew Hayashi, Björn Kauder, Christopher Kilby, Xiaoxiao Li, Mario Macis, Scott Masten, Paul Oyer, Justin Ross, Jagadeesh Sivadasan, and Jeffrey Wooldridge along with seminar participants at the University of Michigan, the American Economic Association Annual Meeting, the International Institute of Public Finance Annual Congress, the National Tax Association Conference, and the Society of Labor Economists Annual Meeting for comments. All links were current as of May 6th 2021. Results from additional specifications described in the text but not included in the paper are available in the Online Appendix.

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Supplementary Material

The online version of this article offers supplementary material (https://doi.org/10.1515/bejeap-2020-0008).

Received: 2020-01-10
Revised: 2021-05-07
Accepted: 2021-05-07
Published Online: 2021-06-09

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