Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy

Wildasin, David E.

doi:10.1016/0094-1190(89)90034-x

Cited by 326 publications

(198 citation statements)

References 16 publications

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“…Each state's incentive to deviate from the agreed tax rate (or interval) is guided by how the capital tax base (as typically considered) and federal transfers react to a downward deviation in capital taxes. 31 It is left to future research how these considerations jointly affect the design of a tax coordination agreement which is voluntarily respected by e.g. EU member states.…”

Section: Resultsmentioning

confidence: 99%

“…Wildasin (1989). 29 If state governments are however able to precommit, a corrective grant will be neutral for state policy.…”

Section: Resultsmentioning

confidence: 99%

“…Capital leaves state i in response to a rise in its capital tax rate which, in turn, raises the tax base in the neighboring state -a positive effect external to state i's tax setting behavior (Wildasin, 1989). In its absence i ≡ 0 each state would provide the efficient amount of public goods leaving no rationale for the federal government to fiscally accommodate lowerlevel government finances (τ = 0).…”

Section: Second Stage: Firms and Households Decide On {Kmentioning

confidence: 99%

“…of Eq. (23) represents the positive horizontal fiscal externality responsible for an inefficiently low taxation of capital in tax competition (Wildasin, 1989), whereas the first two terms constitute the effect on neighbor's utility through the induced change in the federal policy instruments τ and s j . Since the effects are mediated via the federal budget, the effect may be termed a bottom-up-top-down vertical fiscal externality.…”

mentioning

confidence: 99%

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Federal tax-transfer policy and intergovernmental pre-commitment

Koethenbuerger¹

2008

Regional Science and Urban Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Federal and state governments often differ in the capacity to pre-commit to expenditure and tax policy. Whether the implied sequence of public decisions has any efficiency implications is the subject of this paper. We resort to a setting which contrary to most of the literature does not exhibit a perfect tax-base overlap. We show that a federal government's pre-commitment capacity is welfare-improving. Efficiency, however, does not improve over all decision margins. The welfare-increasing policy entails a more distorted level of public consumption. Moreover, welfare may also improve if local governments are able to pre-commit towards the upper level. The rationale is that although federal transfers are formally unconditional they nevertheless entail a tax-price effect; thereby potentially counteracting incentives to engage in a "race to the bottom" in fiscal competition among local governments. Terms of use: Documents inJEL Code: H71, H23, H10.

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Section: Resultsmentioning

confidence: 99%

“…Wildasin (1989). 29 If state governments are however able to precommit, a corrective grant will be neutral for state policy.…”

Section: Resultsmentioning

confidence: 99%

Section: Second Stage: Firms and Households Decide On {Kmentioning

confidence: 99%

mentioning

confidence: 99%

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Federal tax-transfer policy and intergovernmental pre-commitment

Koethenbuerger¹

2008

Regional Science and Urban Economics

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“…Expressed differently, fiscal policy in the presence of a mobile tax base has two beneficial external effects on the foreign country. Raising taxes at home causes an outflow of capital which a) increases foreign revenues [the fiscal externality identified in Wildasin (1989)] and b) lowers the price of capital and increases wages and the returns to the fixed factor abroad. From (5),…”

Section: Tax Competition For Mobile Capitalmentioning

confidence: 99%

Redistribution, Fiscal Competition, and the Politics of Economic Integration

2002

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The paper examines the consequences of the economic integration of factor markets in a model with two countries that redistribute income among their residents. The social benefits in each country are financed by a source based tax on capital which is democratically chosen by its inhabitants. If either capital or labour is internationally mobile, the countries engage in fiscal competition and the partial integration of capital or labour markets is detrimental to the countries' redistributive ability. A move from partial to full integration, however, may alleviate rather than intensify fiscal competition, particularly, if the two countries face sufficiently similar economic and political conditions. In such a situation, for example, tax competition for mobile capital is softened as the labour market becomes more integrated and even vanishes if both factors are fully mobile. As a result, there is more redistribution in equilibrium and a majority of the population * This paper has benefitted from comments by Jan Brueckner, Ig Horstmann, Dave Wildasin, and various participants of seminars at Bonn, Heidelberg, Konstanz, Mannheim, the

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Have Air Pollutant Emissions Converged Among U.S. Regions? Evidence from Unit Root Tests

List

1999

Southern Economic Journal

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Previous studies of income distribution have found evidence indicating that incomes across U.S. regions have converged, supporting the prediction of the neoclassical growth model. A potential shortcoming in these studies is that only one measure of well‐being is considered—a measure of wealth linked to incomes or production. This paper examines whether income convergence was accompanied by air pollutant emission convergence. Results from unit root tests provide some evidence that indicators of environmental quality have converged across U.S. regions during the 1929‐1994 period.

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Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy

Cited by 326 publications

References 16 publications

Federal tax-transfer policy and intergovernmental pre-commitment

Federal tax-transfer policy and intergovernmental pre-commitment

Redistribution, Fiscal Competition, and the Politics of Economic Integration

Have Air Pollutant Emissions Converged Among U.S. Regions? Evidence from Unit Root Tests

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