Leviathanian Fiscal Competition in Heterogeneous Country
In this normative study of fiscal competition mechanism, we allow for various schemes of taxation, various mobility of tax-base, non-identical regions, and nonbenevolent governments. We examine the fundamental trade-o® between “negative externalities” of the competition and benefits from its budget discipline. Some indicators of regional “rivalry” and “non-benevolence” are constructed for diagnosing marginal “over-taxing” in any region. It enables also “in-large” comparison of fiscal regimes. Under some restrictions on the country’s heterogeneity in tax rates, marginal “over-taxing” at competition signifies that switching to certain sort of tax co-ordination would deteriorate welfare.
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- Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
- Zodrow, George R. & Mieszkowski, Peter, 1986. "Pigou, Tiebout, property taxation, and the underprovision of local public goods," Journal of Urban Economics, Elsevier, vol. 19(3), pages 356-370, May.
- Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-75, September.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
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