Fiscal Federalism and Tax Equalization: The potential for progressive local taxes

We construct an empirically informed computational model of fiscal federalism, testing whether horizontal or vertical equalization can solve the fiscal externality problem in an environment in which heterogeneous agents can move and vote. The model expands on the literature by considering the case of progressive local taxation. Although the consequences of progressive taxation under fiscal federalism are well understood, they have not been studied in a context with tax equalization, despite widespread implementation. The model also expands on the literature by comparing the standard median voter model with a realistic alternative voting mechanism. We find that fiscal federalism with progressive taxation naturally leads to segregation as well as inefficient and inequitable public goods provision while the alternative voting mechanism generates more efficient, though less equitable, public goods provision. Equalization policy, under both types of voting, is largely undermined by micro-actors' choices. For this reason, the model also does not find the anticipated effects of vertical equalization discouraging public goods spending among wealthy jurisdictions and horizontal encouraging it among poor jurisdictions. Finally, we identify two optimal scenarios, superior to both complete centralization and complete devolution. These scenarios are not only Pareto optimal, but also conform to a Rawlsian view of justice, offering the best possible outcome for the worst-off. Despite offering the best possible outcomes, both scenarios still entail significant economic segregation and inequitable public goods provision. Under the optimal scenarios agents shift the bulk of revenue collection to the federal government, with few jurisdictions maintaining a small local tax.

Ukraine: sovereign decentralisation or federalism without sovereignty? OSW Commentary No. 133, 18.04.2014

A key element of Russia’s policy towards the new government of Ukraine concerns demands for a constitutional reform that would transform the country from a unitary into a federal state in a way that would considerably privilege the eastern and southern regions. Such a change to Ukraine’s administrative system would enable Moscow to put pressure on Ukraine’s central government via the regions. In order to achieve its objectives, Russia has been pressuring Kyiv to establish a constitutional assembly in a form that would guarantee the endorsement of solutions dictated by Russia. In other words, Russia has been demanding, in what is practically an ultimatum, that Ukraine give up one of the fundamental sovereign rights of a state, the right to freely determine its system of government. Transforming Ukraine into a federal state is an unacceptable idea, primarily because the intention behind Russia’s demands is to undermine Ukraine’s sovereignty, both through the content of the proposed changes and the way in which they are to be implemented. However, keeping in place the current, centralist model of state governance is not a feasible alternative. Ukraine will have to grant its regions broad self-governance powers, including the power to hold local referendums, and to transfer a considerable portion of the prerogatives currently held by the state to the local self-governments, along with adequate financial resources. That is because decentralisation along these lines is the only way forward towards a modern democracy in Ukraine. Russia’s policy has forced Kyiv to undertake legislative work on constitutional reform as a matter of urgency, rather than waiting until a new parliament is elected in which the new, post-Maidan balance of political power will be reflected, as political logic would require. The first draft of the constitutional amendments (of which no details are known at this stage) is to be presented in mid-May, and is expected to come into force in early autumn. However, whether these plans can be put into practice depends on further developments in the eastern part of Ukraine, because (among other reasons) if a state of emergency is introduced, the constitutional amendment process will have to be suspended.

Federation without federalism. Relations between Moscow and the regions. OSW Study 49/2014

The regions of the Russian Federation are immensely diverse economically and geographically as well as when it comes to their national identity, civic awareness and political activity. We are in fact dealing with a ‘multi-speed Russia’: along with the post-industrial regions with their higher living standards and a need for pluralism in politics, there are poverty-stricken, inertial regions, dependent on subsidies from the centre. As a result of the policy of centralisation pursued by the Kremlin since 2000, the autonomy of the regions has been reduced fundamentally. This has affected the performance of the regional elites and made it difficult for the regions to use their natural advantages (such as resources or location) to their benefit. One of the effects of this policy has been the constantly decreasing number of the donor regions. The current model promotes the role of the region as a passive supplicant, for whom it is easier to seek support from the central government, offering loyalty in exchange, than to implement complex systemic reforms that would contribute to long-term development. Moscow’s control (political, economic and administrative) over the regions is currently so thorough that it contradicts the formally existing federal form of government in Russia.

Beyond Cooperation and Competition: What Kind of Federalism for EU Social Policy? CES Germany & Europe Working Papers, No. 00.7, December 2000

The EU has become a loose kind ofsocial federation, a fact that has not been adequately taken into account due to the peculiarities ofthe Maastricht strategy for monetary integration. Yet, a new approach to the economic theory offederalism is required ifone wants to analyze the most pressing issues ofEU social policy. The social insurance view of redistribution and stabilization provides for such an approach. This view supports laboratory federalism in which it is the role ofthe EU Commission to contain systems competition in order to preserve "stability in diversity." The role ofthe EU level would be to promote horizontal and vertical learning processes and to make sure that stability concerns ofthe EU are taken seriously by member countries' governments. The minimum requirements framework for social policy that the EU Commission has adopted must be taken as a point of departure, even though it is a less than satisfactory approach from this point of view. Laboratory standardization, in contrast, would not set specific minimum requirements but meta-standards that protect systems functions and safeguard against systems failures.

The Silent Reform of Swiss Federalism: The New Constitutional Articles on Education

This article examines the decision-making process leading to the new constitutional articles on education in Switzerland. It analyzes how actors from both state levels (Confederation and cantons) could reach consensus in a process that was prone to a "joint-decision trap". To that end, we hypothesize which factors may be conducive to a "problem-solving" style of policy-making in a compulsory negotiation system. Rich empirical material from various sources supports our theoretical arguments: We show that shared beliefs and a common frame of reference, the procedural separation between constitutional and distributional issues, neutral brokers, and informal structures were all beneficial to the success of the reform project.

Federalism in central and eastern Europe,

Bibliography at end of each part.

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Issues for <1976/77-> published in 3 vols.

Toward unity in Africa; a study of federalism in British Africa.

Mode of access: Internet.

Federalism : or The question of exclusive power, the true issue in the present monetary and political discussions in the United States /

Mode of access: Internet.

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Hearings on constitutional reform of federalism : statements by state and local government association representatives.

Item 1049-D.

A new federalism. : Hearings, Ninety-third Congress, first session.

Volume 2 contains text of the Office of Economic Opportunity's National anti-poverty plan, fiscal years 1968-72.

Creative federalism : hearings, Eighty-ninth Congress, second session [-Ninetieth Congress, first session]. ...

Pt. 1 on S. 3509 and S.J. Res 187; pt. 2A-B on S.671 and S. 698.