Single-Factor Sales Apportionment Formula in Georgia. What Is the NET Revenue Effect?

This report provides an update of the static revenue loss and provides estimates of the indirect revenue effects from switching to a single factor sales apportionment formula

Low-income housing tax credit developments and neighborhood property conditions

Public housing has long been a contentious issue for cities and regions. While there is a great need for affordable housing in many communities, neighbors of low-income housing developments fret about neighborhood decay. This paper evaluates the notion that low-income housing developments damage the communities in which they are placed. The focus is on the evaluation of low-income housing tax credit (LIHTC) financed developments, and the neighborhood indicator of interest is the physical condition of nearby properties. The results of the empirical analysis suggest that proximity to LIHTC developments generally has a positive impact on neighborhood property conditions. However, extended analysis that separates LIHTC developments by type and size suggests that only small new construction developments and large rehab developments impact neighborhood property conditions. Further analysis reveals that when the model does not control for crime, the effect of proximity to LIHTC developments on property conditions is negative.

Attracting the power cohort to the Tenth District

A long debated issue in regional economics is whether “people follow jobs” or “jobs follow people.” That is, do people move to where jobs are available, or do employers locate their facilities where potential employees reside? If people follow jobs, an appropriate economic development policy would be to concentrate on luring employers, especially large employers. This view reflects many traditional state and local economic development policies. If, on the other hand, jobs follow people, a better policy would be to focus on luring skilled people by creating an environment that is an attractive place to live. ; Increasingly, state and local economic development agents are following the latter policy. In particular, many state and local governments are seeking to attract a “power cohort” of young, childless, college-educated residents. These people are not only attractive to employers but are typically more responsive to the quality of the urban milieu, which can be influenced by policy. Because singles are generally more mobile than families with school-aged children, much of the economic development effort is focused on that subgroup, but the effort also focuses on childless couples. ; In the Tenth District most cities are relatively weak in attracting this power cohort. Specifically, the district cities as a whole attract fewer migrants from this cohort than would be expected given their populations, wage levels, and housing costs. This fact raises an important question: Why? ; Edmiston argues that the relative performance of migration across Tenth District cities—and elsewhere in the United States—is largely a function of two sets of factors. The district does well based on the first set of factors: unemployment, wages, and taxes. The district is relatively weak based on the second set of factors: cultural and recreational amenities, intellectual capital, topography, and crime.

Could restrictions on payday lending hurt consumers?

The payday loan, or more generally, the deferred deposit loan, is among the most contentious forms of credit. It typically signifies a small-dollar, short-term, unsecured loan to a high-risk borrower, often resulting in an effective annual percentage rate of 390 percent a rate well in excess of usury limits set by many states. Consumer advocates argue that payday loans take advantage of vulnerable, uninformed borrowers and often create “debt spirals.” Debt spirals arise from repeated payday borrowing, using new loans to pay off old ones, and often paying many times the original loan amount in interest. ; In the wake of the 2008 financial crisis, many policymakers are considering strengthening consumer protections on payday lending. Yet few studies have focused on any unintended consequences of restricting such lending. Thus, the question arises: Could restrictions on payday lending have adverse effects? ; Edmiston examines payday lending and provides new empirical evidence on how restrictions could affect consumers. His analysis shows that restrictions could deny some consumers access to credit, limit their ability to maintain formal credit standing, or force them to seek more costly credit alternatives. Thus, any policy decisions to restrict payday lending should weigh these potential costs against the potential benefits.

A new perspective on rising nonbusiness bankruptcy filing rates : analyzing the regional factors

Nonbusiness bankruptcy filing rates have increased almost five-fold since 1980. This alarming growth was largely the impetus for the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The intent of the new law, which went into effect in October, 2005, was to eliminate alleged abuses of the bankruptcy system and to reduce filing rates. ; In deliberations on the new law, Congress expressed concern about the underlying causes of bankruptcy. The tools currently available for analysis leave serious gaps in understanding bankruptcy behavior. While many studies have sought to discover the causes of the rising filing rates, they have largely focused on aggregated data over time. This approach is logical—but ignores the considerable variation in filing rates across regions. Only by examining the regional differences in rates can we gain meaningful insight into their causes. ; Edmiston describes a new model of county bankruptcy filing rates. The model contributes to the current understanding by improving on some of the approaches already used in other studies and by including a number of determinants not previously considered. He concludes that homestead exemptions and wage garnishments can be effective policy levers in managing rising bankruptcy filing rates. He also finds that social issues—stigma, gambling, and health insurance, among others—are critical regional factors that may help explain the rising bankruptcy filing rates. Finally, he shows that higher levels of self-employment, another regional characteristic, are associated with lower bankruptcy filing rates.Bankruptcy

Characteristics of high foreclosure neighborhoods in the Tenth District

The foreclosure crisis that began in earnest in 2006 continues to shrink the once valuable assets of homeowners, communities, and investors. In the last three years, more than three million households have lost their homes, and as many as 5 million more could lose their homes in the next three years. ; A striking feature of the crisis is the variation in its severity across both time and space. Initially, the foreclosure crisis hit low-income neighborhoods disproportionately. Foreclosures remain concentrated in these neighborhoods. But in recent months, the foreclosure epidemic has spread more deeply into higher-income neighborhoods. What accounts for the evolving pattern of foreclosure rates across neighborhoods, and where might concentrations of foreclosures occur in the future? ; Edmiston analyzes the seven states of the Tenth Federal Reserve District to help shed light on the foreclosure rate pattern and to explore where foreclosure trends are likely to head. His analysis confirms that foreclosure rates have been high in low-income neighborhoods--but only to the extent that subprime mortgages penetrated those neighborhoods. He also finds that the foreclosure crisis is seeping into higher-income neighborhoods--due primarily to unfavorable conditions in local economies and residential real estate markets.

Proposed Bond Funded Capital Spending

The Governor has proposed to issue $1,347,250,000 in bonds in order to finance spending on road construction, school buildings, and other construction projects. This note estimates the effect of this capital spending program on the Georgia economy

A Fresh Look at the VAT

The purpose of this paper is to identify and examine some of the key VAT policy issues that have arisen in the implementation of the tax. Specifically, the paper examines four issues as examples of the specific inefficiencies that arise in actual practice with VATs. The first section examines the effect of registration thresholds, normally allowed to lessen administrative burdens, as an example of structural inefficiencies. The second section examines the tariff effects arising from administration of the VAT at border. The third section considers application of the VAT on financial services as an example of exemptions from the tax. Finally, the problem of distributing the revenues of a destination VAT levied at the subnational level is discussed.Working Paper Number 04-38

The Commercial Music Industry in Atlanta and the State of Georgia: An Economic Impact Study

This study was prepared to ascertain the magnitude of the commercial music industry's economic impact on Atlanta and its surrounding areas. Report #8

Rising foreclosures in the United States: a perfect storm

Residential foreclosures in the United States have been rising very rapidly since 2006. In the second quarter of 2007, the share of outstanding mortgages in some stage of foreclosure stood at 1.4 percent, near historic highs and up from less than 1 percent a year earlier. The number of mortgages entering the foreclosure process reached an all-time high in mid-2007, suggesting that the foreclosure surge is likely to get worse before it gets better. ; The foreclosure surge was created by a perfect storm of events. First, in recent years the share of subprime mortgage originations increased substantially. Second, foreclosure rates for adjustable-rate mortgages (ARMs) have increased considerably, especially for subprime ARMs. This increase is largely due to rising short-term interest rates and to payment resets for many nontraditional mortgages. Finally, high loan-to-value originations in recent years, coupled with stagnant or falling home prices, have left many people with insufficient equity to sell or refinance their homes. ; Edmiston and Zalneraitis provide a detailed dissection of the current foreclosure surge. They conclude with a discussion of why the foreclosure situation is likely to get worse over the next one to two years and why it is likely to improve afterward.Mortgage loans