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.

Federal tax deductibility for local taxes and its effect on local revenue policies

This dissertation analyzes whether and how changes in federal tax policy affect local tax policies, specifically, the elimination of the federal deductibility of state and local taxes for individual taxpayers by the Tax Reform Act of 1986 (TRA86) in 59 California cities. Two methods are used in the study: a survey of local revenue officials and a time event time-series/cross sectional sales tax reliance study.^ The reliance study uses a covariance model to pool cross-section and time-series observations. The results of the reliance study indicate a statistically significant overall decline in sales tax reliance after 1986. The results of the survey indicate that local policy makers generally do not believe that federal deductibility is an important factor when considering raising local sales taxes. Further analysis shows that local revenue officials claiming federal deductibility is not an important factor are associated mostly with cities that registered no significant decline in sales tax reliance after 1986. Similarly, local revenue officials claiming federal deductibility is an important factor when considering local tax policy are associated mostly with cities that suffered a significant decline in sales tax reliance after 1986.^ Of that group, further analysis shows that the declines in sales tax reliance are associated mostly with cities located in the southwestern part of the state. When compared to other cities in the state, an analysis of variance reveals that there are a series of statistically significant factors associated with southwestern cities which may contribute to the decline in sales tax reliance following the enactment of the Tax Reform Act of 1986. ^

Issue review : state and local tax revenue fiscal year 2001 to fiscal year 2010.

This issue review provides a historical perspective regarding state and local taxes collected each fiscal year in Iowa from fiscal year 2001 through fiscal year 2010. The issue review also compares the growth in state taxes versus local taxes as well as the growth in tax collections compared to the growth in Iowa personal income and Iowa employment.

Tax differentials and agglomeration economies in intraregional firm location

This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs’ economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Tax differentials and agglomeration economies in intraregional firm location

This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs¿ economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Tax differentials and agglomeration economies in intraregional firm location

This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs¿ economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Impuestos locales a las transferencias de dominio de bienes inmuebles (Tema Central)

Este artículo versa sobre los impuestos municipales y metropolitanos a la transferencia de dominio de bienes inmuebles en el contexto ecuatoriano como parte de la tributación local, y examina con un enfoque teórico los elementos cardinales de esta específica imposición, así como de aspectos formales y de gestión, a remolque del marco normativo vigente. En esta línea se exponen algunas inconsistencias del régimen jurídico de la materia con el correlativo planteamiento de varios supuestos que podrían considerarse para la depuración del régimen en cuestión.

Extract from legislation passed 1799 February 7

One fragment of a leaf containing a handwritten extract from unidentified legislation stipulating that a section of the bill "should not be so construed as to exempt" the real estate of the College or its officers from payment of local taxes beyond that exempted in the Charter of 1650 and the state Constitution. The text includes the note, "passed 7 Feb'y --99" and presumably refers to the bill referenced in President Willard's letter to Samuel Phillips that "passed the House, and is now before the Senate." The section did not become part of the tax law.

Efectos fiscales de los asentamientos hidroeléctricos: el caso de la cuenca de los Ríos Negro y Nare en Colombia

Con la presencia de asentamientos hidroeléctricos en su territorio, los municipios del oriente y nordeste antioqueño han visto afectada su estructura tributaria y territorial, a pesar de la reglamentación compen­satoria del sector eléctrico. Este artículo, analiza los efectos tributarios generados por la compensación del impuesto predial. Para lograrlo se revisan los montos recibidos por los municipios de las empresas generadoras y se realiza una indagación empírica del impuesto bajo los escenarios con y sin asenta­mientos hidroeléctricos. De esta forma se determina el diferencial tributario. Se concluye que, además de la insuficiencia de las transferencias para compensar la pérdida del capital natural de las cuencas hidroeléctricas, la expansión del sector eléctrico genera regresividad tributaria, por causa de privilegios y exenciones concebidos por las Leyes.