Taxation and Deadweight Loss in a System of Intergovernmental Transfers
Michael Smart ()
Canadian Journal of Economics, 1998, vol. 31, issue 1, 189-206
Intergovernmental transfer programs in many federal systems, including Canada, attempt to equalize differences in subnational jurisdictions' tax capacities on the basis of the so-called representative tax system (RTS). It is shown that RTS equalization grants effectively compensate subnational governments for a portion of the deadweight loss associated with taxes and, consequently, the grants may tend to increase the distortionary tax rates chosen by subnational governments. This may be the case even when equalization is confined to tax bases that themselves are nondistortionary, such as the taxation of pure economic rents.
References: Add references at CitEc
Citations: View citations in EconPapers (125) Track citations by RSS feed
Downloads: (external link)
http://links.jstor.org/sici?sici=0008-4085%2819980 ... ADLIA%3E2.0.CO%3B2-2 (text/html)
only available to JSTOR subscribers
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:31:y:1998:i:1:p:189-206
Ordering information: This journal article can be ordered from
Access Statistics for this article
Canadian Journal of Economics is currently edited by Katherine Cuff
More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().