This paper presents a procedure for generating state-specific time-varying estimates of marginal tax rates (MTRs). Most estimates of MTRs follow a procedure developed by Koester and Kormendi (1989) (K&K). Unfortunately, the time-invariant nature of the K&K estimates precludes their use as...

This research presents a simple procedure for improving state-specific estimates of marginal tax rates (MTR’s). Most research employing MTR’s follows a procedure developed by Koester and Kormendi (K&K, 1987). Unfortunately, the time-invariant nature of the K&K estimates precludes...