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Fiscal competition and tax instrument choice: the role of income inequality

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  • Joshua Hall

    (West Virginia University)

Abstract

School districts in Ohio have the choice of two tax instruments with which to raise revenue: the property tax and a residence-based income tax. Economic theory predicts that local governments, if given the choice, would prefer to diversify their tax base to reduce the political costs associated with excessive reliance on one tax. Why then, do some school districts not utilize the income tax? This paper extends earlier work on this issue by showing that income inequality is negatively associated with the choice of an income tax.

Suggested Citation

  • Joshua Hall, 2006. "Fiscal competition and tax instrument choice: the role of income inequality," Economics Bulletin, AccessEcon, vol. 8(12), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-06h70060
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    References listed on IDEAS

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    Cited by:

    1. Benny Geys & Federico Revelli, 2011. "Economic and Political Foundations of Local Tax Structures: An Empirical Investigation of the Tax Mix of Flemish Municipalities," Environment and Planning C, , vol. 29(3), pages 410-427, June.
    2. Joshua C. Hall & Antonios M. Koumpias, 2018. "Growth And Variability Of School District Income Tax Revenues: Is Tax Base Diversification A Good Idea For School Financing?," Contemporary Economic Policy, Western Economic Association International, vol. 36(4), pages 678-691, October.
    3. Joshua Hall & Antonis Koumpias, 2015. "The Volatility of School District Income Tax Revenues: Is Tax Base Diversification a Good Idea?," Working Papers 15-14, Department of Economics, West Virginia University.
    4. Joshua C. Hall & Justin M. Ross, 2010. "Tiebout Competition, Yardstick Competition, and Tax Instrument Choice: Evidence from Ohio School Districts," Public Finance Review, , vol. 38(6), pages 710-737, November.

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    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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