We study the tension between fiscal decentralization and progressive taxation. We present a multi-community model in which households differ in incomes and housing preferences and in which the local income tax rate is a function of an exogenous progressive tax schedule and an endogenous local...

Common public-finance models suggest that tax competition between welfare states leads to a zero-taxation outcome in the absence of migration costs or other barriers to migration. This paper develops a two-region framework with mobile altruistic taxpayers and immobile welfare recipients. Tax...

This paper reviews and extends recent attempts to better understand fiscal policy decision-making. Surveys of politicians are complementary to traditional empirical analyses and can be used to extract beliefs of policymakers. There is much heterogeneity across and also within parties. Often...

In a model of privately provided public goods within a repeated-game setting, Pecorino (1999) shows that it is not only possible to maintain cooperation, but it is "easy" in a large economy. Models of privately provided public goods are closely related to interregional tax competition models...

This paper analyzes tax competition for mobile capital among jurisdictions where capital is employed by the subsidiaries of a unitary firm. Equity capital of the unitary firm is taxed under a formula apportionment scheme, and each jurisdiction has the leeway to choose its desired mix of...

We investigate competition for FDI within a region when a foreign multinational firm can profitably exploit differences in statutory corporate tax rates by shifting taxable profits to lower-tax jurisdictions. In such a framework we show that targeted tax competition may lead to higher welfare...

This paper examines how sequential decision-making by two levels of government can result in fiscal imbalances. Federal-regional transfers serve to equalize the marginal cost of public funds between regions hit by different shocks. The optimal transfers minimize the efficiency cost of taxation...

Complete descriptions of Cournot-Nash equilibria in a model with large and asymmetric countries and international mobile capital are given. These countries have two tax instruments at their disposal. The possibility is shown that if the more populated country exports capital, a mutually...

This paper provides a comparison of tax morale between inhabitants of East and West Germany after its post-reunification period, using World Value Survey data for the years 1990 and 1997. The setting of the German reunification is particularly interesting for the analysis of tax morale in that...

It has been argued in the literature that interjurisdictional competition forces the public sector to increase its efficiency and thus helps to tame Leviathan governments. The paper addresses this hypothesis by means of a simple tax-competition model with a Leviathan state. It is seen that the...