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Taxing Our Neighbors? Why Some Sub-National Revenues Are So Small

Author

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  • Jorge Baldrich

    (Department of Economics, Universidad de San Andres)

Abstract

This paper analyzes the determinants of local government revenues and the incentives faced by politicians in the design of tax policy. The decision of deepening local tax collections carries costs and benefits for local politicians. Balancing in the margin these costs and benefits allows for an endogenous determination of the taxing level. The paper stresses the role of markets size in determining politicians’ incentives to enact a tax regime. In addition, we provide a rationale for the central government-local government tax ratio as a key tax effort variable. Furthermore, local levels of income inequality are relevant in explaining tax collections.

Suggested Citation

  • Jorge Baldrich, 2010. "Taxing Our Neighbors? Why Some Sub-National Revenues Are So Small," Working Papers 100, Universidad de San Andres, Departamento de Economia, revised Mar 2010.
    • Handle: RePEc:sad:wpaper:100
    as

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    File URL: https://webacademicos.udesa.edu.ar/pub/econ/doc100.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc.
    2. Sergio Rebelo, 1998. "The Role of Knowledge and Capital in Economic Growth," WIDER Working Paper Series wp-1998-149, World Institute for Development Economic Research (UNU-WIDER).
    3. Joseph E. Stiglitz, 1977. "The Theory of Local Public Goods," International Economic Association Series, in: Martin S. Feldstein & Robert P. Inman (ed.), The Economics of Public Services, chapter 12, pages 274-333, Palgrave Macmillan.
    4. Alejandro Esteller-More, 2004. "Tax Evasion in Interrelated Taxes," Public Economics 0401001, University Library of Munich, Germany.
    5. Banerjee, Abhijit V & Duflo, Esther, 2003. "Inequality and Growth: What Can the Data Say?," Journal of Economic Growth, Springer, vol. 8(3), pages 267-299, September.
    6. Kenneth L. Sokoloff & Eric M. Zolt, 2007. "Inequality and the Evolution of Institutions of Taxation: Evidence from the Economic History of the Americas," NBER Chapters, in: The Decline of Latin American Economies: Growth, Institutions, and Crises, pages 83-138, National Bureau of Economic Research, Inc.
    7. Rebelo, S., 1998. "The Role of Knowledge and Capital in Economic Growth," Research Paper 149, World Institute for Development Economics Research.
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    Cited by:

    1. Daniel Artana & Sebastian Auguste & Marcela Cristini & Cynthia Moskovitz & Ivana Templado, 2012. "Sub-National Revenue Mobilization in Latin American and Caribbean Countries: The Case of Argentina," Research Department Publications 4765, Inter-American Development Bank, Research Department.

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    Keywords

    tax; sub-national revenues;

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