Honors Thesis

Ian Peters on the Internet

Students in Eastern Connecticut State University’s honors program are expected to complete an honors thesis during their final three semesters at the university.  This is meant to be an original creative or research project that is designed, executed, and presented by the student, under the supervision of a faculty member.

My honors thesis, “It’s All Very Taxing: Interstate Tax Competition and the Balanced Budget,” is an exploration of the long term impacts of state-level corporate tax competition, attempting to determine how states respond to losses in corporate revenue and how competition may impact states of different geographical sizes.

This thesis was presented at the Mathematical Association of America, Northeastern Section Meeting at Gordon College in November 2015 and at the National Conference of Undergraduate Research, at the University of North Carolina, Asheville in April 2016.  It was awarded the Phillip F. Elliot Exceptional Honors Thesis.

Below, you will find the abstract of this thesis and some materials that may be of interest.

In response to economic downturns, state governments respond to decreased business activity by lowering corporate tax rates, to lure in firms from other states. This behavior leads to states competing for firms, engaging in tax competition. Previous research has shown that tax competition is ineffective at attracting firms. This is due to a race-to-the-bottom effect caused by competitive behavior, leading each state to lose its competitive advantage. The research in this project focuses on both the effects of tax competition on small states compared to large states and the effects that it has on state government budget balances. Econometric modeling and location theory are used to test and measure these impacts. Multiple methods of regression are employed to determine the reliability of the models developed and explain the results of the project.