Efficient decentralized fiscal and environmental policy: A dual purpose Henry George tax
One consequence of decentralized responsibility to set tax policy and environmental standards is that local governments might try to attract industry and jobs by underproviding local public goods with lower taxes or lax environmental standards or both. But if local authorities exploit fixed property site (i.e., land) taxation to fund local public goods, affect firm migration, and internalize potential local emission rents, herein we find decentralized efficiency is supported. This result reflects a dual form of the classic Henry George theorem previously overlooked.
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