Tax mix corners and other kinks by Federico Revelli

By:

Revelli, Federico [author]

Material type: Text

TextSeries: The journal of law and economics ; Volume 56 , number 3Chicago : University of Chicago Press ; 2013Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

00222186

Subject(s):

Tax -- Taxation

LOC classification:

HB73 JOU

Online resources:

Click here to access online

Summary: This paper models the local tax mix determination process in the presence of statewide fiscal limitations—the decentralized government finance archetype—and shows how excess sensitivity of local public spending to grants (the conventionally and somewhat misleadingly termed “flypaper effect”) arises in the constrained tax mix irrespective of whether lower or upper limits bind and how it cannot, in general, be taken as a symptom of local government overspending. An empirical application to Italian province panel data provides consistent evidence of the role of corner solutions produced by two-sided tax limits in explaining the sensitivity of local public expenditures to grants.

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Holdings
Item type	Current library	Call number	Vol info	Copy number	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HB73 JOU (Browse shelf(Opens below))	Vol. 56, no.3 (pages 741-776)	SP17888	Not for loan	For in house only

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Previous	HB73 JOU Media versus special interests	HB73 JOU The evolution of property rights : state law or informs law?	HB73 JOU A simple theory of predation	HB73 JOU Tax mix corners and other kinks	HB73 JOU Vermin trials	HB73 JOU The problem of social cost	HB73 JOU On the design of leniency programs	Next

This paper models the local tax mix determination process in the presence of statewide fiscal limitations—the decentralized government finance archetype—and shows how excess sensitivity of local public spending to grants (the conventionally and somewhat misleadingly termed “flypaper effect”) arises in the constrained tax mix irrespective of whether lower or upper limits bind and how it cannot, in general, be taken as a symptom of local government overspending. An empirical application to Italian province panel data provides consistent evidence of the role of corner solutions produced by two-sided tax limits in explaining the sensitivity of local public expenditures to grants.

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