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Optimal income taxation and decentralized fiscal federalism

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  • Aronsson, Thomas
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    Abstract

    This paper concerns redistribution and public good provision under asymmetric information, which are here ingredients of a policy-problem facing each member state (nation) of an economic federation with decentralized leadership. Each member state is assumed to have its own redistributive policy and pattern of public consumption, whereas the federal level redistributes (ex-post) between the member states. The results show how and why federal ex-post redistribution may modify the use of income taxation and public good provision at the national level, relative to the policy outcome in the absence of a federal government, as well as how the national policy incentives depend on whether or not the federal government uses distortionary taxes.

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    Bibliographic Info

    Article provided by Elsevier in its journal Regional Science and Urban Economics.

    Volume (Year): 40 (2010)
    Issue (Month): 4 (July)
    Pages: 187-195

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    Handle: RePEc:eee:regeco:v:40:y:2010:i:4:p:187-195

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    Web page: http://www.elsevier.com/locate/regec

    Related research

    Keywords: Optimal taxation Redistribution Public goods Fiscal federalism;

    References

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    Cited by:
    1. Aronsson, Thomas & Persson, Lars, 2012. "Decentralized fiscal federalism revisited: Optimal income taxation and public goods under horizontal leadership," Economics Letters, Elsevier, vol. 117(1), pages 223-226.

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