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Party Politics, Governors, and Economic Policy
In this article, we evaluate the role of elections in governors' state tax policy making. Does it
tnatter for state taxes whether the governor is a Democrat or Republican and whether she is
eligible for re-election or faces a binding term limit? Using a Regression Discontinuity Design
and a panel of U.S. states, we fmd that the manner in which governors of different parties
implement different tax policies turns crucially on the incumbent's eligibility for re-election. Reelectable Democratic governors increase income taxes relative to similarly situated Republicans,
yielding divergence between party policy positions. However, governors facing a binding
term limit exhibit the reverse policy difference, resulting in a movement of policy back together.
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