Tax Policy in an Economic Federation With Proportional Membership Fees
A significant part of the revenue in the EU budget is raised via a GNI-based resource. The purpose of this paper is to analyze how this way of raising funds to the central authority in an economic federation affects the tax policy implemented by the lower level jurisdictions. This question is analyzed both when labor is immobile, as well as mobile, between the jurisdictions. A key result is that if the government in a lower level jurisdiction acts as a Nash follower, then it has an incentive to implement a distortionary tax on labor whereas if the lower level government is able to act as a strategic leader within the federation, then the incentive to distort the labor market may be redundant.
|Date of creation:||16 May 2013|
|Contact details of provider:|| Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden|
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:hhs:umnees:0859. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Skog)
If references are entirely missing, you can add them using this form.