Taxing Our Neighbors? Why Some Sub-National Revenues Are So Small
AbstractThis paper analyzes the determinants of local government revenues and the incentives faced by politicians in the design of tax policy. The decision of deepening local tax collections carries costs and benefits for local politicians. Balancing in the margin these costs and benefits allows for an endogenous determination of the taxing level. The paper stresses the role of markets size in determining politicians’ incentives to enact a tax regime. In addition, we provide a rationale for the central government-local government tax ratio as a key tax effort variable. Furthermore, local levels of income inequality are relevant in explaining tax collections.
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Bibliographic InfoPaper provided by Universidad de San Andres, Departamento de Economia in its series Working Papers with number 100.
Date of creation: Mar 2010
Date of revision: Mar 2010
tax; sub-national revenues;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-11 (All new papers)
- NEP-PBE-2010-04-11 (Public Economics)
- NEP-PUB-2010-04-11 (Public Finance)
- NEP-URE-2010-04-11 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alejandro Esteller, 2004.
"Tax Evasion in Interrelated Taxes,"
2004/2, Institut d'Economia de Barcelona (IEB).
- Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc.
- Kenneth L. Sokoloff & Eric M. Zolt, 2007. "Inequality and the Evolution of Institutions of Taxation: Evidence from the Economic History of the Americas," NBER Chapters, in: The Decline of Latin American Economies: Growth, Institutions, and Crises, pages 83-138 National Bureau of Economic Research, Inc.
- Rebelo, S., 1998. "The Role of Knowledge and Capital in Economic Growth," Research Paper 149, World Institute for Development Economics Research.
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