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

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  • Braid, Ralph M.
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    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.

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    Bibliographic Info

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

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

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    Handle: RePEc:eee:juecon:v:75:y:2013:i:c:p:57-67

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    Web page: http://www.elsevier.com/locate/inca/622905

    Related research

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

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