Recent theoretical research suggests that financing sub-national governments’ expenditure out of own revenue sources is linked to more responsible budgeting, because the financial implications of spending decisions then are internalized within a jurisdiction. We test this proposition...

We study the fiscal and tax response to intergovernmental grants, exploiting quasi-experimental variation within Germany’s fiscal equalization scheme triggered by Census revisions of official population counts. Municipal budgets do not adjust instantly. Instead, spending and investments adapt...

Cooperative fiscal federalism needs a multi-level consent to decide on the allocation of intergovernmental transfers. We study how parliamentary representation of municipalities on the federal level influences the allocation of federal transfers to municipal governments under this type of...

We study the impact of taxation on the location choices of individuals and tax bases in Italy. We exploit some recent tax decentralization reforms, which granted regions and municipalities greater power in setting income tax rates across brackets. Combining granular micro-level data on tax...

In this paper we examine the degree to which Michigan's property value assessment growth cap has eroded the tax base and created substantial differences in effective tax rates among residential properties within the City of Detroit. While the analysis focuses on a specific city with significant...

This paper provides novel evidence on the role of income taxes for residential rents and spatial sorting. Drawing on comprehensive apartment-level data, we identify the effects of tax differentials across municipal boundaries in Switzerland. The boundary discontinuity design (BDD) corrects for...

Do citizens engage in comparative performance evaluation across local governments? And if they do, how can we disentangle this behavior from other forms of strategic interactions among local governments or simple spatial correlation across neighboring jurisdictions? We use spatial econometrics...

This paper examines the effects of real estate transfer taxes (RETT) on property prices using a rich micro dataset of roughly 17 million German properties for the period from 2005 to 2019. We exploit a 2006 constitutional reform that allows states to set their own RETT rates, leading to frequent...

Restrictions imposed on property assessment practices by state legislation such as Proposition 13 in California and Proposition 2 1/2 in Massachusetts can lead to significant divergences between the assessed and market values of property, particularly for households with long tenures. As...

Despite its theoretical merits, Land Value Taxation (LVT) is not a common policy instrument in most countries. One of the main reasons is uncertainty regarding its distributional impacts. This uncertainty has not been settled by the literature, due to a lack of appropriate data at the household...