Method for including state and local taxes

[codykallen]

To include state and local corporate income taxes, we can use an average of state corporate income taxes from this Tax Foundation report. Then the corporate tax rate used for the calculations becomes tau_f + tau_s - tau_f * tau_s, which adjusts for the deductibility of state and local taxes from the corporate income tax.

For include state and local taxes on pass-through business income, we can use another Tax Foundation report, although we would need to subtract 40% from each of the rates to get the tax ''adder'' for the pass-through tax rates. I believe the TF numbers are already adjusted for the limited deductibility.

When applying these, we can either just use a single national average, perhaps weighting by GDP or by some other measure by state. Alternatively, we can weight using that measure by industry, and allow the effect of state taxes to vary by industry.

For property taxes, we can estimate the average property tax rate by dividing total property tax revenue ($526 billion in 2017, according to this report) by total tangible fixed assets (`6,734.7 + 35,358.7 = $42,093.4 billion in 2017, from BEA data) for an average property tax rate of 1.25%, although this does not apply to intangible assets. Because we lack fixed assets by state, we can't make this vary by state.

[codykallen]

We also need to augment the tax rates on investment income using a "4.8 percent marginal personal state and local tax rate for capital income", supposedly from an NBER estimate. Source (and perhaps further detail) required.

[codykallen]

Actually, for rates on individual income by state, use this source from the NBER.

You can get the tax rates on each type of income by state and year (just use 2017). Also consider how to deal with the federal offset.

[codykallen]

This has now been implemented, although further work may be advisable for dealing with the corporate tax rate.