How you buy affects what you get: Technology acquisition by state governments

Source: Kawika Pierson, Fred Thompson, Government Information Quarterly, In Press – Corrected Proof, Available online June 24, 2016
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From the abstract:
Research suggests that governments should rely on standardized information technology solutions rather than custom built ones. We find that, for many categories of taxes, states that have contracted out the development of their tax-processing systems to providers offering standardized solutions see statistically and economically significant increases in collections relative to states that have not. We find no evidence that financial administration expenditures increase for these states. At the same time, there are several categories of taxes where we do not find a positive impact. We reconcile these findings by developing a qualitative argument that standardized solutions in tax administration may be most effective for the types of taxes that are the most difficult to enforce.

• Leverages a natural experiment to test government IT acquisition strategies.
• Uses tax collection as an objective outcome measure.
• Compares governments that adopt more standardized solutions with those that do not.
• Governments with standardized solutions show significantly higher tax collections.
• Collection improvements seem more likely in taxes that are harder to enforce.