A recursive conjoint modeling approach to state severance tax analysis: Mining Florida phosphates

Abstract

A conjoint modeling system linking microsimulation, I-O and econometric components is utilized to examine the potential impact of modifying Florida's severance tax law as applicable to the mining of central Florida phosphates. Impacts quantified over a twenty-year time horizon cover industry response (both production and investment), broader induced changes in the central Florida economy (employment, income, population) and tax accruals, both direct and indirect, state and local. Analysis of empirical results focuses on non-linearity of effects across alternative tax and world market scenarios, variability of the aggregate employment to production multiplier, output discontinuities which persist despite allowance for mine production states between full capacity and shutdown, relative investment and production impacts of tax change, and the role of induced taxes in determination of total public sector revenue effects.