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The Tax Assignment Problem: Ruminations on How Theory and Practice Depend on History

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  • McLure, Charles E. Jr.

Abstract

This paper discusses how the theory and the practice of tax assignment--which level of government should tax what, and how--depend on history. It describes the meaning and methods of tax assignment, reviews implications of Musgrave’s three-branch view of public finance, notes the importance of accretions to knowledge--of the technology of taxation and of the economic effects of taxation, speculates about how economic evolution affects the conventional wisdom on tax assignment, identifies questionable tax assignments found in various federations that are legacies of history, and emphasizes the danger of assuming "one size fits all" in tax assignment.

Suggested Citation

  • McLure, Charles E. Jr., 2001. "The Tax Assignment Problem: Ruminations on How Theory and Practice Depend on History," National Tax Journal, National Tax Association, vol. 54(2), pages 339-364, June.
  • Handle: RePEc:ntj:journl:v:54:y:2001:i:2:p:339-64
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    References listed on IDEAS

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    1. Austan Goolsbee, 1998. "It's Not About the Money: Why Natural Experiments Don't Work on the Rich," NBER Working Papers 6395, National Bureau of Economic Research, Inc.
    2. Robert A. Moffitt & Mark Wilhelm, 1998. "Taxation and the Labor Supply: Decisions of the Affluent," NBER Working Papers 6621, National Bureau of Economic Research, Inc.
    3. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
    4. Karl Ove Aarbu & Thor Olav Thoresen, 1997. "The Norwegian Tax Reform; Distributional Effects and the High-income Response," Discussion Papers 207, Statistics Norway, Research Department.
    5. Aaberge, Rolf & Dagsvik, John K & Strom, Steinar, 1995. " Labor Supply Responses and Welfare Effects of Tax Reforms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 635-659, December.
    6. Slemrod, Joel, 1998. "Methodological Issues in Measuring and Interpreting Taxable Income Elasticities," National Tax Journal, National Tax Association, vol. 51(n. 4), pages 773-88, December.
    7. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
    8. Slemrod, Joel, 1998. "Methodological Issues in Measuring and Interpreting Taxable Income Elasticities," National Tax Journal, National Tax Association, vol. 51(4), pages 773-788, December.
    9. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, pages 633-687.
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    Cited by:

    1. Sharma, Chanchal Kumar, 2010. "Beyond Gaps and Imbalances: Re-Structuring the Debate on Intergovernmental Fiscal Relations," MPRA Paper 32145, University Library of Munich, Germany.
    2. Jorge Martinez-Vazquez & Cristian Sepúlveda, 2007. "The Municipal Transfer System in Nicaragua:Evaluation and Proposals for Reform," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0708, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Rocabado Mejía, Carlos, 2006. "La Asignación Tributaria en Bolivia," Documentos de trabajo 7/2006, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    4. Boadway, Robin & Tremblay, Jean-François, 2012. "Reassessment of the Tiebout model," Journal of Public Economics, Elsevier, pages 1063-1078.
    5. Luca Gandullia, 2012. "The role of direct taxes in fiscal decentralization," DEP - series of economic working papers 6/2012, University of Genoa, Research Doctorate in Public Economics.
    6. Jorge Martínez-Vázquez, 2008. "Revenue Assignments in the Practice of Fiscal Decentralization," Chapters,in: Fiscal Federalism and Political Decentralization, chapter 2 Edward Elgar Publishing.
    7. Boadway, Robin & Tremblay, Jean-François, 2012. "Reassessment of the Tiebout model," Journal of Public Economics, Elsevier, pages 1063-1078.
    8. Jorge Martínez-Vázquez, 2008. "Revenue Assignments in the Practice of Fiscal Decentralization," Chapters,in: Fiscal Federalism and Political Decentralization, chapter 2 Edward Elgar Publishing.
    9. Mare, Mauro, 2015. "Why and How should the EU budget be reformed?," MPRA Paper 76112, University Library of Munich, Germany.
    10. Jiří Čermák & Martin Gürtler, 2014. "Influence of Criteria of Built-up Areas in the Village to the Total Share of Municipalities on Shared Taxes," Acta Universitatis Bohemiae Meridionales, University of South Bohemia in Ceske Budejovice, vol. 17(1), pages 43-59.
    11. Margit Schratzenstaller & Bernd Berghuber, 2006. "Alternative Financing Sources for the EU Budget," WIFO Monatsberichte (monthly reports), WIFO, pages 893-910.

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