Tax competition and federal equalization schemes with decentralized leadership

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• 作者：Emilson Caputo Delfino Silva
• 关键词：Fiscal equalization ; Income redistribution ; Capital tax competition ; Decentralized leadership
• 刊名：International Tax and Public Finance
• 出版年：2017
• 出版时间：February 2017
• 年：2017
• 卷：24
• 期：1
• 页码：164-178
• 全文大小：
• 刊物类别：Business and Economics
• 刊物主题：Public Finance; Business Taxation/Tax Law; Public Finance;
• 出版者：Springer US
• ISSN：1573-6970
• 卷排序：24

文摘

Regional governments compete by setting capital taxes in anticipation of the central government’s fiscal equalization and income redistribution policies. I start by demonstrating that the constrained socially optimal allocation satisfies the Pareto efficient conditions; therefore, it may be first best. It is also shown that the subgame perfect equilibrium for the game played by regional and central governments is socially optimal. The anticipation of equalization of marginal utilities of public consumption and equalization of marginal utilities of private consumption provides regional governments with correct incentives in the setting of capital taxes, preventing the phenomenon known as “race to the bottom.”