German municipalities have substantial autonomy in setting taxes on two distinct tax bases: business profits and property values. We use this setting and a two-step approach to explore whether implemented tax policy is consistent with the seminal inverse-elasticity rule. First, we estimate the...

After a brief introduction dealing with critical opinions of some economists on the European austerity policy, the authors point out that austerity as a means of achieving fiscal consolidation and financial stability is applied when the fiscal domain is weak. After analyzing the effects of the...

Regions inhabited with an immobile population of disabled and able individuals compete to attract mobile firms that provide jobs. The redistributive goal of regional governments is to support the disabled, who cannot work. Able individuals may work, be involuntary unemployed because of frictions...

Genetically modified (GM) food has raised both health-risk fears and environmental concerns. This has led some countries to ban the trade in such food triggering a great deal of controversy among countries. In this paper we ask under what conditions will voluntary labeling of GM-free food be at...

Differences in the degree of fiscal decentralization observed between the U.S. and many countries in Europe cannot be explained within the standard theory of fiscal decentralization. By introducing preferences for solidarity - equality in the provision of public goods and services across regions...

We analyze a simple model of local public good provision in a region comprising two districts, a city and a village. When districts remain autonomous and local public goods have positive spillover effects on the neighboring district, there is underprovision of public goods in both the city and...

The paper tries to shed some light on the problems of centralization and decentralization within an economic union and the federal member states. Integration and decentralization are not opposite policy strategies but both meaningful if the single public goods and services supplies are analyzed...

This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities. Administrative linked employer-employee data allows estimating heterogeneous worker and firm effects. We set up a general theoretical framework showing that corporate taxes can have a...

Tax sharing arrangements provide considerable financial resources to sub-central government levels. This statement is true both for unitary and federal states although tax revenue sharing mechanisms differ significantly across countries. The basic aim of this article is to compare the mechanisms...

Tax administrations around the world have introduced e-filing of tax returns due to its potential to improve tax return filing compliance. The introduction of this service for businesses in South Africa has not yielded the expected results. Drawing on tax administrative data on tax return filing...