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Intergovernmental Aid To Reduce Fiscal Disparities: Problems of Definition and Measurement

Author

Listed:
  • Thomas A. Downes

    (Northwestern University)

  • Thomas F. Pogue

    (University of Iowa)

Abstract

This article examines the problem of structuring intergovernmental aid to correct for fiscal disparities. In general, distributing aid to equalize average tax effort will not eliminate underlying fiscal disparities. To do so requires that aid be distributed so as to equalize the local tax rate necessary to finance a base level of public services. Reviewed briefly are the potential consequences of these two approaches for horizontal equity and tax base mobility. Using data for Arizona school districts, the two approaches are shown to have widely disparate implications for the distribution of state school aid .

Suggested Citation

  • Thomas A. Downes & Thomas F. Pogue, 1992. "Intergovernmental Aid To Reduce Fiscal Disparities: Problems of Definition and Measurement," Public Finance Review, , vol. 20(4), pages 468-482, October.
    • Handle: RePEc:sae:pubfin:v:20:y:1992:i:4:p:468-482
    DOI: 10.1177/109114219202000405
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    References listed on IDEAS

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    1. Feldstein, Martin S, 1975. "Wealth Neutrality and Local Choice in Public Education," American Economic Review, American Economic Association, vol. 65(1), pages 75-89, March.
    2. Ratcliffe, Kerri & Riddle, Bruce & Yinger, John, 1990. "The fiscal condition of school districts in Nebraska: Is small beautiful?," Economics of Education Review, Elsevier, vol. 9(1), pages 81-99, March.
    3. Yinger, John, 1986. "On fiscal disparities across cities," Journal of Urban Economics, Elsevier, vol. 19(3), pages 316-337, May.
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    Cited by:

    1. Bo Zhao, 2020. "How to Design a State Education Aid Formula That Is Equitable, Adequate, and Politically Feasible: The Case of Connecticut," Working Papers 21-1, Federal Reserve Bank of Boston.
    2. Andrew Reschovsky & Amyellen Schwartz, 1992. "Evaluating the Success of Need-Based State Aid in the Presence of Property Tax Limitations," Public Finance Review, , vol. 20(4), pages 483-498, October.
    3. Stan Chervin & Kelly Edmiston & Matthew N. Murray, 2000. "Urban Malls, Tax Base Migration, and State Intergovernmental Aid," Public Finance Review, , vol. 28(4), pages 309-334, July.
    4. Audun Langørgen & Rolf Aaberge, 1999. "A Structural Approach for Measuring Fiscal Disparities," Discussion Papers 254, Statistics Norway, Research Department.
    5. Bo Zhao, 2015. "From urban core to wealthy towns: nonschool fiscal disparities across Connecticut municipalities," Working Papers 15-14, Federal Reserve Bank of Boston.

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