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Majority choice of taxation and redistribution in a federation

journal contribution
posted on 2024-03-26, 11:54 authored by Stephen CalabreseStephen Calabrese, Dennis Epple, Richard Romano

To study redistribution and taxation in a federation, we provide a model with a central government and multiple local governments, the former with power to levy an income tax for redistribution, and the latter choosing a local income tax, property tax, lump-sum tax or subsidy, and a local public good. Policy is set by majority choice at each tier of government by households that differ by income and by ability to move among local jurisdictions. We provide sufficient conditions for existence of equilibrium and examine its properties. Central findings are federal income distribution, little local redistribution, and local preference for property taxation over income taxation to fund local public goods.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Journal of Public Economics

ISSN

0047-2727

Publisher

Elsevier BV

Volume

217

Article number

104782

Department affiliated with

  • Economics Publications
  • Business and Management Publications

Institution

University of Sussex

Peer reviewed?

  • Yes