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Ad-valorem taxation and the balance of externalities in federations

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  • Karakosta, Ourania

Abstract

This paper shows that--in contrast to unit taxation--horizontal and vertical externalities that exist in federations are ambiguous in sign when taxation is ad-valorem. Their balance, however, depends on the marginal valuation of lower-level government and federal public goods.

Suggested Citation

  • Karakosta, Ourania, 2010. "Ad-valorem taxation and the balance of externalities in federations," Economics Letters, Elsevier, vol. 107(1), pages 71-73, April.
    • Handle: RePEc:eee:ecolet:v:107:y:2010:i:1:p:71-73
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    References listed on IDEAS

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    1. Dahlby, Bev & Wilson, Leonard S., 2003. "Vertical fiscal externalities in a federation," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 917-930, May.
    2. Kotsogiannis, Christos & Marti­nez, Diego, 2008. "Ad valorem taxes and the fiscal gap in federations," Economics Letters, Elsevier, vol. 99(3), pages 431-434, June.
    3. Michael Keen & Christos Kotsogiannis, 2003. "Leviathan and Capital Tax Competition in Federations," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 177-199, April.
    4. Michael J. Keen & Christos Kotsogiannis, 2002. "Does Federalism Lead to Excessively High Taxes?," American Economic Review, American Economic Association, vol. 92(1), pages 363-370, March.
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