This Paper explores the theoretical relationship between tax relief for private giving and locational equilibria. Tax relief for giving may receive political support at the local level because of its distributional effects; however, through its effects on public provision choices, such relief may affect individual location decisions and, in so doing, may promote economic segregation rather than integration. In such a scenario, a ban on local tax incentives for giving would be Pareto-improving and would thus be sanctioned by a majority-supported federal tax constitution.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
4354.
Find related papers by JEL classification: H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General