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Public-Input Provision under Formula Apportionment

Author

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  • Mutsumi Matsumoto

Abstract

This paper analyzes how the presence of corporate income taxation with formula apportionment affects public-input provision. In a federation endowed with a fixed amount of mobile capital, noncooperative regional governments provide factor-augmenting public inputs and maximize their budget surplus. It is shown that the different systems of formula apportionment have different implications for expenditure inefficiency, although interregional competition for mobile capital always results in undertaxation.

Suggested Citation

  • Mutsumi Matsumoto, 2016. "Public-Input Provision under Formula Apportionment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 72(1), pages 74-95, March.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201603)72:1_74:ppufa_2.0.tx_2-v
    DOI: 10.1628/001522108X14557023949256
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    Citations

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    Cited by:

    1. Elisabeth Gugl & George R. Zodrow, 2019. "Tax competition and the efficiency of “benefit-related” business taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(3), pages 486-505, June.
    2. Mutsumi Matsumoto & Kota Sugahara, 2017. "A note on production taxation and public-input provision," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(2), pages 419-426, September.
    3. Elisabeth Gugl & George R. Zodrow, 2014. "The Efficiency of “Benefit-Related” Business Taxes," Working Papers 1406, Oxford University Centre for Business Taxation.
    4. Mlčúchová Markéta, 2023. "Formulary apportionment in the European Union—future research agenda," Economics and Business Review, Sciendo, vol. 9(3), pages 124-152, October.

    More about this item

    Keywords

    corporate income taxation; formula apportionment; factor-augmenting public inputs;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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