from tax competition. This paper further explores the conditions under which local grant systems enforced by the state … tax competition. This basic model is then extended in order to allow for variations in the government objectives at the … state level. A subsequent empirical analysis of local tax policy exploits the experience with local fiscal revenue sharing …

status imposes on others. In a model where status depends on both income and effort, we show that the optimal corrective tax …-seeking preferences justify heavier taxation of income because this serves to internalise the negative externality that the pursuit of … function in such a model, and discuss potential implications for optimal income taxation. …