Berry, Frances and William Berry. “Tax Innovation by American States: Capitalizing on Political Opportunity.” American Journal of Political Science, 36 (August 1992): 715-42.

This paper assesses the factors that prompt states to adopt taxes during the twentieth century. We test five explanations of state tax innovation derived from the literature--economic development, fiscal health, election cycle, party control, and regional diffusion--using event history analysis, a pooled cross-sectional time-series technique. While little support is found for the economic evelopment and party control explanations, our empirical results are highly consistent with a political opportunity explanation of state tax adoptions; (1) the presence of a long time until the next election, (2) the existence of a fiscal crisis, and (3) the presence of neighboring states that have previously adopted a tax all create opportunities for politicians to shield themselves from the political costs of supporting a tax increase and are all shown by empirical analysis to increase the probability of a tax adoption. This empirical evidence is consistent across different tax instruments and different periods of analysis throughout the twentieth century.