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Fiscal disparity among the States revisited

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  • Robert Tannenwald

Abstract

The 50 states differ sharply in the scope of public services their state and local governments must deliver and in the costs of providing them. The governments of many states, through no fault of their own, must work relatively hard to provide the services needed by those who reside, work, travel, and vacation within their borders. The states also differ dramatically in fiscal capacity, that is, the capacity of their state and local governments to raise revenues. The degree of fiscal disparity among the states has been a salient issue throughout our nation's history, and a focal point of the recent "devolution" debate. This article begins with a discussion of the principal issues confronting analysts in the evaluation of fiscal capacity. The author compares and contrasts alternative methods used in this evaluation, and he updates state-by-state estimates of fiscal capacity, fiscal need, and fiscal comfort to fiscal year 1996. He discusses key findings and draws implications for New England, which he finds to be by far the least fiscally stressed region in the nation.

Suggested Citation

  • Robert Tannenwald, 1999. "Fiscal disparity among the States revisited," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 3-25.
  • Handle: RePEc:fip:fedbne:y:1999:i:jul:p:3-25
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    File URL: http://www.bostonfed.org/economic/neer/neer1999/neer499a.htm
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    File URL: http://www.bostonfed.org/economic/neer/neer1999/neer499a.pdf
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    References listed on IDEAS

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    1. Robert Tannenwald, 1997. "The subsidy from state and local tax deductibility: trends, methodological issues, and its value after federal tax reform," Working Papers 97-8, Federal Reserve Bank of Boston.
    2. Feldstein, Martin S & Metcalf, Gilbert E, 1987. "The Effect of Federal Tax Deductibility on State and Local Taxes and Spending," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 710-736, August.
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    Cited by:

    1. Joaquín Viloria De La Hoz, 2001. "Descentralización en el Caribe colombiano: las finanzas departamentales en los noventas," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL Y URBANA 002283, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
    2. Santiago Lago Peñas, 2002. "Nivelación interterritorial e ineficiencia de las decisiones presupuestarias: reflexiones para el caso español," Hacienda Pública Española, IEF, vol. 162(3), pages 79-100, ¨Septembe.
    3. Masayoshi Hayashi, 2013. "On the Decomposition of Regional Stabilization and Redistribution," CIRJE F-Series CIRJE-F-910, CIRJE, Faculty of Economics, University of Tokyo.

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    Keywords

    State finance ; Taxation - New England;

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