Advanced Search
MyIDEAS: Login to save this article or follow this journal

State and local tax competition in a spatial model with sales taxes and residential property taxes

Contents:

Author Info

  • Braid, Ralph M.
Registered author(s):

    Abstract

    This paper presents a theoretical model with a uniformly populated line that is divided into local jurisdictions (and/or states). If one level of government imposes sales and residential property taxes, and if the spatial extent of each taxing jurisdiction is positive and finite, then (in Nash equilibrium) the sales tax rate is less than residential property tax rate, housing consumption is suboptimal, and the public good is underprovided in each jurisdiction. If a very large state (or country) is divided into local jurisdictions, and if both levels of government choose tax rates endogenously, then under some assumptions there is an efficient outcome.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/pii/S0094119012000782
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Urban Economics.

    Volume (Year): 75 (2013)
    Issue (Month): C ()
    Pages: 57-67

    as in new window
    Handle: RePEc:eee:juecon:v:75:y:2013:i:c:p:57-67

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/inca/622905

    Related research

    Keywords: Tax competition; Horizontal taxation externality; Vertical taxation externality; Sales tax; Property tax;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Ohsawa, Yoshiaki, 2003. "A spatial tax harmonization model," European Economic Review, Elsevier, Elsevier, vol. 47(3), pages 443-459, June.
    2. Hoyt, William H., 1991. "Competitive jurisdictions, congestion, and the Henry George Theorem : When should property be taxed instead of land?," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 21(3), pages 351-370, November.
    3. Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, American Economic Association, vol. 76(5), pages 1086-1102, December.
    4. Devereux, M.P. & Lockwood, B. & Redoano, M., 2007. "Horizontal and vertical indirect tax competition: Theory and some evidence from the USA," Journal of Public Economics, Elsevier, Elsevier, vol. 91(3-4), pages 451-479, April.
    5. Nielsen, Soren Bo, 2001. " A Simple Model of Commodity Taxation and Cross-Border Shopping," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 103(4), pages 599-623, December.
    6. Lucas, Vander, 2004. "Cross-border shopping in a federal economy," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 34(4), pages 365-385, July.
    7. Bucovetsky, Sam & Wilson, John Douglas, 1991. "Tax competition with two tax instruments," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 21(3), pages 333-350, November.
    8. Braid Ralph M., 1993. "Spatial Competition between Jurisdictions Which Tax Perfectly Competitive Retail (or Production) Centers," Journal of Urban Economics, Elsevier, Elsevier, vol. 34(1), pages 75-95, July.
    9. Boadway, R & Keen, M, 1996. "Efficiency and the optimal direction of federal-state transfers," IFS Working Papers, Institute for Fiscal Studies W96/01, Institute for Fiscal Studies.
    10. Braid, Ralph M., 2000. "A Spatial Model of Tax Competition with Multiple Tax Instruments," Journal of Urban Economics, Elsevier, Elsevier, vol. 47(1), pages 88-114, January.
    11. Wildasin, David E., 1988. "Nash equilibria in models of fiscal competition," Journal of Public Economics, Elsevier, Elsevier, vol. 35(2), pages 229-240, March.
    12. Krelove, R., 1993. "The persistence and inefficiency of property tax finance of local public expenditures," Journal of Public Economics, Elsevier, Elsevier, vol. 51(3), pages 415-435, July.
    13. Keen, Michael J. & Kotsogiannis, Christos, 2004. "Tax competition in federations and the welfare consequences of decentralization," Journal of Urban Economics, Elsevier, Elsevier, vol. 56(3), pages 397-407, November.
    14. Thomas J. Nechyba, 1996. "Local Property and State Income Taxes: The Role of Interjurisdictional Competition and Collusion," NBER Working Papers 5419, National Bureau of Economic Research, Inc.
    15. Ravi Kanbur & Michael Keen, 1991. "Jeux Sans Frontieres: Tax Competition and Tax Coordination when Countries Differ in Size," Working Papers, Queen's University, Department of Economics 819, Queen's University, Department of Economics.
    16. Mintz, J. & Tulkens, H., 1984. "Commodity tax competition between member states of a federation: equilibrium and efficiency," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1984027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. Beck, John H., 1983. "Tax competition, uniform assessment, and the benefit principle," Journal of Urban Economics, Elsevier, Elsevier, vol. 13(2), pages 127-146, March.
    18. Bev Dahlby, 1996. "Fiscal externalities and the design of intergovernmental grants," International Tax and Public Finance, Springer, Springer, vol. 3(3), pages 397-412, July.
    19. Bucovetsky, S. & Marchand, M. & Pestieau, P., 1998. "Tax Competition and Revelation of Preferences for Public Expenditure," Journal of Urban Economics, Elsevier, Elsevier, vol. 44(3), pages 367-390, November.
    20. Jan K. Brueckner, 2004. "Fiscal Decentralization with Distortionary Taxation: Tiebout vs. Tax Competition," International Tax and Public Finance, Springer, Springer, vol. 11(2), pages 133-153, 03.
    21. Wilson, J.D., 1990. "Tax Competition With Interregional Differences In Factor Endowments," Working Papers, John Deutsch Institute for the Study of Economic Policy 4, John Deutsch Institute for the Study of Economic Policy.
    22. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, National Tax Association, vol. 52(n. 2), pages 269-304, June.
    23. Arnott, Richard & Grieson, Ronald E., 1981. "Optimal fiscal policy for a state or local government," Journal of Urban Economics, Elsevier, Elsevier, vol. 9(1), pages 23-48, January.
    24. WILDASIN, David E., . "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -831, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    25. Zodrow, George R. & Mieszkowski, Peter, 1986. "Pigou, Tiebout, property taxation, and the underprovision of local public goods," Journal of Urban Economics, Elsevier, Elsevier, vol. 19(3), pages 356-370, May.
    26. Bucovetsky, S., 1991. "Asymmetric tax competition," Journal of Urban Economics, Elsevier, Elsevier, vol. 30(2), pages 167-181, September.
    27. Braid, Ralph M., 2005. "Tax competition, tax exporting and higher-government choice of tax instruments for local governments," Journal of Public Economics, Elsevier, Elsevier, vol. 89(9-10), pages 1789-1821, September.
    28. Kangoh Lee, 2003. "Factor Ownership and Governmental Strategic Interaction," Journal of Public Economic Theory, Association for Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 345-361, 04.
    29. Michael J. Keen & Christos Kotsogiannis, 2002. "Does Federalism Lead to Excessively High Taxes?," American Economic Review, American Economic Association, American Economic Association, vol. 92(1), pages 363-370, March.
    30. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, Elsevier, vol. 19(3), pages 296-315, May.
    31. Kristof Dascher & Alexander Haupt, 2008. "The Political Economy of Regional Integration Projects at Borders where Rich and Poor Meet: The Role of Cross-Border Shopping and Community Sorting," CESifo Working Paper Series, CESifo Group Munich 2280, CESifo Group Munich.
    32. Braid, Ralph M, 1996. "Symmetric Tax Competition with Multiple Jurisdictions in Each Metropolitan Area," American Economic Review, American Economic Association, American Economic Association, vol. 86(5), pages 1279-90, December.
    33. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, Elsevier, vol. 88(6), pages 1065-1091, June.
    34. Hoyt, William H., 2001. "Tax Policy Coordination, Vertical Externalities, and Optimal Taxation in a System of Hierarchical Governments," Journal of Urban Economics, Elsevier, Elsevier, vol. 50(3), pages 491-516, November.
    35. Trandel, Gregory A., 1994. "Interstate commodity tax differentials and the distribution of residents," Journal of Public Economics, Elsevier, Elsevier, vol. 53(3), pages 435-457, March.
    36. Brueckner, Jan K., 2000. "A Tiebout/tax-competition model," Journal of Public Economics, Elsevier, Elsevier, vol. 77(2), pages 285-306, August.
    37. Ohsawa, Yoshiaki, 1999. "Cross-border shopping and commodity tax competition among governments," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 29(1), pages 33-51, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:juecon:v:75:y:2013:i:c:p:57-67. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.