The Local Decision to Tax: Evidence from Large U.S. Cities
48 Pages Posted: 7 Aug 2007 Last revised: 26 Dec 2022
Date Written: April 1989
Abstract
The structure of local taxation is an important determinant of the fiscal performance of decentralized public economies. In contrast to our understanding of local government spending, however, we know surprisingly little about how cities and states set taxes. This study specifies and estimates a model of the institutional, political, and economic determinants of the local decision to tax. Redistributive politics is an important determinant of local tax policy, at least for this sample of 41 large U.S. cities during the period 1961-1986. The results cast serious doubt on the validity of the "representative" or average taxpayer approach to behavioral modeling of fiscal policy for large, income diverse governments. The results allow us to predict the effects on local financing of removing federal tax deductibility of local taxes, an issue of current importance in the United States.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Local Business Taxation and Competition for Capital: The Choice of the Tax Rate
-
City Taxes and Property Tax Bases
By Katharine Bradbury and Helen F. Ladd
-
Corporate Tax Competition and the Decline of Public Investment
By Pedro Gomes and Francois Pouget
-
Fiscal Competition over Taxes and Public Inputs: Theory and Evidence
By Sebastian Hauptmeier, Ferdi Mittermaier, ...