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Grant Illusion, Tax Illusion, and Local Government Spending

Author

Listed:
  • Peter M. Mitias

    (Hampden-Sydney College)

  • Geoffrey K. Turnbull

    (Georgia State University)

Abstract

Tax and grant illusion are envisioned as alternative forms of fiscal illusion in the literature, with differing implications for local government spending. This article shows that tax and grant illusion, previously thought to be separate sources of fiscal illusion, are in fact interdependent. It presents a method for identifying the relevant (if any) form of fiscal illusion, exploiting the theoretical relationships to directly estimate perception parameters. The estimates reveal that county spending is affected by the traditional depiction of grant illusion rather than tax illusion.

Suggested Citation

  • Peter M. Mitias & Geoffrey K. Turnbull, 2001. "Grant Illusion, Tax Illusion, and Local Government Spending," Public Finance Review, , vol. 29(5), pages 347-368, September.
    • Handle: RePEc:sae:pubfin:v:29:y:2001:i:5:p:347-368
    DOI: 10.1177/109114210102900501
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    References listed on IDEAS

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    Cited by:

    1. Eckel, Catherine C. & Grossman, Philip J. & Johnston, Rachel M., 2005. "An experimental test of the crowding out hypothesis," Journal of Public Economics, Elsevier, vol. 89(8), pages 1543-1560, August.
    2. Turnbull Geoffrey K & Salvino Robert F., 2009. "Do Broader Eminent Domain Powers Increase Government Size?," Review of Law & Economics, De Gruyter, vol. 5(1), pages 785-806, December.

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