Does Fiscal Decentralization Constrain Leviathan? Evidence from Local Property Tax Competition
AbstractThis paper reexamines whether fiscal decentralization constrains Leviathan government. Using panel data for Pennsylvania, we compare actual property tax rates to the Leviathan revenue-maximizing rates for municipalities, school districts, and counties. Using spatial econometric methods we also estimate the degree of spatial dependence at the three levels of local government. We find that fiscal decentralization results in stronger intergovernmental competition and lower tax rates. We also find evidence of collusion among school districts that exhibit high interdependence but also high tax rates. This calls into question the current literature's blind use of spatial dependence as a measure of intergovernmental competition.
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Bibliographic InfoPaper provided by Department of Economics, West Virginia University in its series Working Papers with number 10-16.
Length: 45 pages
Date of creation: 2010
Date of revision:
Fiscal decentralization; Leviathan; Tax competition;
Find related papers by JEL classification:
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-02 (All new papers)
- NEP-GEO-2010-10-02 (Economic Geography)
- NEP-PBE-2010-10-02 (Public Economics)
- NEP-URE-2010-10-02 (Urban & Real Estate Economics)
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