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The Consequences of Overlapping Tax Bases for Redistribution and Public Spending in a Federation

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Author Info
Boadway, R.
Marchand, M.
Vigneault, M.

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Abstract

Tax and expenditure policies are studied in a federation with mperfectly mobile households. States implement a linear progressive tax and supply a public good. A vertical fiscal externality, reflecting the effect of the state policies on federal revenues, provides an incentive to state taxes to be too progressive. A horizontal fiscal externality causes non-optimal states taxes and expenditures on the migration effect.

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Publisher Info
Paper provided by Catholique de Louvain - Center for Operations Research and Economics in its series Papers with number 9803.

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Length: 32 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:fth:louvco:9803

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Postal: BELGIQUE, UNIVERSITE CATHOLIQUE DE LOUVAIN, CENTER FOR OPERATIONS RESEARCH AND ECONOMETRICS (CORE), LOUVAIN-LA-NEUVE, BELGIQUE.
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Keywords: TAXATION

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Find related papers by JEL classification:
H2 - Public Economics - - Taxation, Subsidies, and Revenue
H7 - Public Economics - - State and Local Government; Intergovernmental Relations

Cited by:
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  1. Jorge Martinez-Vazquez, 2007. "Revenue Assignments in the Practice of Fiscal Decentralization," International Studies Program Working Paper Series, at AYSPS, GSU paper0708, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  2. Rizzo, Leonzio, 2005. "Interaction between Vertical and Horizontal tax Competition: Theory and Evidence," MPRA Paper 5334, University Library of Munich, Germany. [Downloadable!]
  3. Aronsson, Thomas, 2007. "General Income Taxation, Public Goods and Decentralized Leadership," UmeÃ¥ Economic Studies 715, Umeå University, Department of Economics. [Downloadable!]
  4. Blomquist, Sören & Micheletto, Luca, 2004. "Redistribution, In-Kind Transfers and Matching Grants when the Federal Government Lacks Information on Local Costs," Working Paper Series 2004:15, Uppsala University, Department of Economics. [Downloadable!]
  5. Aronsson, Thomas & Wikström, Magnus, 2001. "Optimal Taxation and Risk-Sharing Arrangements in an Economic Federation," UmeÃ¥ Economic Studies 538, Umeå University, Department of Economics. [Downloadable!]
  6. Diego Martínez, 2007. "Optimal federal taxes with public inputs," Working Papers 07.16, Universidad Pablo de Olavide, Departamento de Economía. [Downloadable!]
  7. Lisa Grazzini & Alessandro Petretto, 2007. "Tax Competition between Unitary and Federal Countries," Economics of Governance, Springer, vol. 8(1), pages 17-36, January. [Downloadable!] (restricted)
  8. Koen Burggraeve & Philip Du Caju, 2003. "The labour market and fiscal impact of labour reductions: the case of reduction of employers' social security contributions under a wage norm regime with automatic price indexing of wages," Research series 200303-1, National Bank of Belgium. [Downloadable!]
  9. Aronsson, Thomas & Blomquist, Sören, 2004. "Redistribution and Provision of Public Goods in an Economic Federation," UmeÃ¥ Economic Studies 636, Umeå University, Department of Economics. [Downloadable!]
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  10. Robin Boadway, 2001. "Financing Confederation Revisited: The Economic State of the Federation," The State of Economics in Canada: Festschrift in Honour of David Slater, in: Patrick Grady & Andrew Sharpe (ed.), The State of Economics in Canada: Festschrift in Honour of David Slater, pages 37-56 Centre for the Study of Living Standards. [Downloadable!]
  11. Marko Koethenbuerger, 2003. "Tax Competition in a Fiscal Union with Decentralized Leadership," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  12. Aronsson, Thomas & Blomquist, Sören & Micheletto, Luca, 2007. "Where Should the Elderly Live and Who Should Pay for their Care? A Study in Demographics and Geographical Economics," Working Paper Series 2007:6, Uppsala University, Department of Economics. [Downloadable!]
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  13. R. Boadway & K. Cuff & M. Marchand, 2001. "Equalization and the Decentralization of Revenue-Raising in a Federation," Department of Economics Working Papers 2001-04, McMaster University. [Downloadable!]
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  14. María Martínez Torres, . "Flujos migratorios interregionales en España: Un modelo de ecuaciones simultáneas," Studies on the Spanish Economy 207, FEDEA. [Downloadable!]
  15. Esteller-Moré, Álex & Solé-Ollé, Albert, 1999. "Vertical income tax externalities and fiscal interdependence : evidence from the US," ZEW Discussion Papers 99-28, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  16. Granlund, David, 2005. "Sickness absence and health care in an economic federation," UmeÃ¥ Economic Studies 665, Umeå University, Department of Economics, revised 13 Apr 2007. [Downloadable!]
  17. Vander LUCAS, 2001. "Cross-Border Shopping in a Federalist Economy," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2002018, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 28 May 2002. [Downloadable!]
  18. Marko Koethenbuerger, 2007. "Federal Tax-Transfer Policy and Intergovernmental Pre-Commitment," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  19. Robin Boadway & Jean-Francois Tremblay, 2005. "A Theory of Vertical Fiscal Imbalance," Working Papers 2006-04, University of Kentucky, Institute for Federalism and Intergovernmental Relations. [Downloadable!]
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  20. Backlund, Kenneth & Sjögren, Tomas & Stage, Jesper, 2008. "Optimal Tax and Expenditure Policy in the Presence of Migration - Are Credit Restrictions Important?," UmeÃ¥ Economic Studies 749, Umeå University, Department of Economics. [Downloadable!]
  21. Esteban Klor, 2002. "A Positive Model of Overlapping Income Taxation in a Federation of States," Wallis Working Papers WP32, University of Rochester - Wallis Institute of Political Economy. [Downloadable!]
  22. Rizzo, Leonzio, 2007. "Interaction between vertical and horizontal tax competition: evidence and some theory," MPRA Paper 8632, University Library of Munich, Germany, revised 2008. [Downloadable!]
  23. De Borger Bruno & Stef Proost, 2004. "Vertical and horizontal tax competition in the transport sector," Energy, Transport and Environment Working Papers Series ete0412, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment. [Downloadable!]
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  24. Revelli Federico, 2002. "Reaction or interaction? Spatial process identification in multi-tiered government structures," Department of Economics Working Papers 200202, University of Turin. [Downloadable!]
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