Ad Valorem Taxes and the Fiscal Gap in Federations
AbstractThis paper investigates the implications of vertical fiscal externalities for the optimal federal tax and the sign of fiscal gap in the presence of ad valorem taxation. It is shown that the federal government can always achieve the second-best optimum for public good provision. The sign of the fiscal gap is, in general, ambiguous. The consequence of this is that a precise evaluation of the fiscal gap requires an explicit consideration of the underlying fundamentals of the federal economy.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 0703.
Date of creation: 2007
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Ad valorem taxes; fiscal gap; externalities; fiscal federalism;
Other versions of this item:
- Kotsogiannis, Christos & Martinez, Diego, 2008. "Ad valorem taxes and the fiscal gap in federations," Economics Letters, Elsevier, vol. 99(3), pages 431-434, June.
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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- Diego Martínez, 2008.
"Optimal Federal Taxes with Public Inputs,"
FinanzArchiv: Public Finance Analysis,
Mohr Siebeck, Tübingen, vol. 64(4), pages 422-433, December.
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