Optimal income taxation and decentralized fiscal federalism

Thomas Aronsson

Regional Science and Urban Economics, 2010, vol. 40, issue 4, 187-195

Abstract: This paper concerns redistribution and public good provision under asymmetric information, which are here ingredients of a policy-problem facing each member state (nation) of an economic federation with decentralized leadership. Each member state is assumed to have its own redistributive policy and pattern of public consumption, whereas the federal level redistributes (ex-post) between the member states. The results show how and why federal ex-post redistribution may modify the use of income taxation and public good provision at the national level, relative to the policy outcome in the absence of a federal government, as well as how the national policy incentives depend on whether or not the federal government uses distortionary taxes.

Keywords: Optimal; taxation; Redistribution; Public; goods; Fiscal; federalism (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:40:y:2010:i:4:p:187-195

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