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Tiebout (J Polit Econ 64:416–424, 1956) argues that local public goods will be provided efficiently if households vote with their feet to move to the jurisdiction that best matches their preferences. This outcome may be impeded by overlapping jurisdictions of municipalities, school districts, and police agencies. To investigate the impact of coterminous borders on Tiebout sorting, two counties with similar demographics are chosen within the New York City metropolitan area. Differing histories lead to municipalities in Bergen County, NJ, always being coterminous with elementary school districts and police agencies, while few municipalities in Nassau County, NY, have their own police agencies and even fewer have their own school districts. Heterogeneity of sociodemographics and service quality are calculated between neighboring Census block groups, and absolute difference in median household income is regressed on these measures and interactions between the three kinds of service area borders. School district and police agency borders and quality are found to not be individually significant (with one minor exception). Police agency borders interacted with municipal borders increase income sorting, while school district borders interacted with police agency borders decrease income sorting. Income differences are also correlated with differences in the proportion of White and Black population in neighboring block groups, supporting previous findings that Tiebout sorting may exacerbate segregation. Municipal borders are an independently significant influence on income sorting across all specifications, indicating the important and independent role of local public goods other than education and public safety in residential location. [ABSTRACT FROM AUTHOR]

This paper tests for potential cross-border substitution in casino gambling between Illinois and Missouri due to the launch of sports betting in Illinois. Using casino-level gambling revenue and admissions data, difference-in-differences, event study analysis, and regression discontinuity design, our findings suggest that the launch of sports betting increased casino revenues and admissions in the Illinois casinos and decreased revenue and admissions in Missouri casinos close to the border of Illinois and Missouri. Thus, Missouri not only lost potential sports betting tax revenue but also tax revenue from casino gambling revenue and admissions resulting from cross-border substitution between Missouri and Illinois after the launch of sports betting. The size of the lost casino and foregone sports betting tax revenues suggests Missouri and other states in similar circumstances are likely to experience continued fiscal pressure to legalize sports betting despite possible moral objections or an intent to minimize social costs through prohibition. [ABSTRACT FROM AUTHOR]

Over the last three decades, a little-noted change has taken place in state lotteries. This change is an increase in the average payout rate, the share of sales that is returned to players in the form of prizes. Because it reduces the rate of implicit taxation on lottery purchases and its accompanying welfare loss, this change has inadvertently made lotteries better, or at least less objectionable. This paper reviews the normative case for reducing the implied tax, documents the rise in payout rates across the United States, offers an explanation for that rise, notes the starring role played by instant games, illustrates its effect on the regressivity of lottery finance, and documents the surprising correlation between the price of instant games and their payout rates. [ABSTRACT FROM AUTHOR]

AbstractThis article analyses the effect of acts of corruption committed by officials in charge of the financial management of municipalities on the mobilization of local public revenue in Cameroon. From a sample of 213 communes out of the 360 in Cameroon, we specify and estimate a panel data model using the Generalized Least Squares (GLS) method over the period 2010–2020. Our results show that corruption measured by convictions of officials in charge of the financial management of municipalities by the financial jurisdiction of accounts in Cameroon reduces local public revenue. Our results identify tax compliance captured through access to education, health and average per capita income as the main transmission channels. The study calls for the intensification of controls on the financial management of municipalities and the strengthening of sanctions imposed on public officials who have been convicted of financial embezzlement. [ABSTRACT FROM AUTHOR]

Three diverging interpretations of the property tax dominate the standard economic literature: the benefit view considers it meaningless to assess a distributive profile for the property tax; the capital-tax view assumes a progressive profile; and the excise-tax view assumes a regressive profile. This article discusses these views with theoretical and empirical arguments and defends the excise-tax view. Then, the distributive profile of the property tax in Québec is assessed thanks to a rich administrative database. The property tax appears very regressive. In addition, no general pattern appears depending on the size of the urban zones. At the opposite, property tax-to-income ratios depend steeply on the household composition, because of the economies of scale in housing consumption: they are larger for singles than couples (and even larger for aged singles) and lower for households with children than without children. [ABSTRACT FROM AUTHOR]

The aim of the paper is to identify the relevant prior research focused on the Formulary Apportionment methodology in the European Union, to explore the current literature and develop directions for future research. Reflecting upon the announced European Commission’s Proposal for new framework for business taxation and the foreseeable upswing of academic discussion focused on the formulary apportionment methodology this paper represents the first systematic literature review on this topic. The study identifies eight main thematic clusters, provides an interpretative framework and suggests valuable future research directions within each thematic cluster as well as general future research agenda.

This study tries to empirically estimate the effects of the composition of intergovernmental transfers on tax collection across the Indian states by using panel regression model. As intergovernmental transfers constitute almost 47 per cent in total revenue of the states, it could play a vital role in states’ own tax collection. The impact of different channels of federal transfers on tax capacities is examined among 25 Indian states over the period from 1991-92 to 2017-18. The study also attempted to capture the asymmetric effect of various forms of transfers, but findings reveal that only state plan grant has a significant effect on its own tax collection. The empirical evidence suggests that the composition of intergovernmental transfers has a dampening effect on states’ own tax revenue. Apart from transfers’ variables, the study incorporates socio-economic and certain political variables to estimate states’ own tax collections.

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A growing strand of literature relates pro-market institutions to business and overall employment creation. However, the effects of pro-market institutions on industry-specific employment creation still need to be better understood. Employment creation in some industries may be more sensitive to pro-market institutions. Moreover, if these industries employ a large proportion of the population, the role of local-level institutions becomes more critical for boosting employment creation across industries. Therefore, we disentangle the effects of local-level pro-market institutions on employment creation across nine major industries by using 5-year balanced panel data of 374 US metropolitan areas from 1972 to 2017. Our fixed-effects results indicate that pro-market institutions boost employment creation only in the manufacturing, retail, and construction sectors. Furthermore, our findings reveal that local public policies can benefit or harm local employment creation, depending on the concentration of industries in the area. [ABSTRACT FROM AUTHOR]

The impacts of fiscal decentralization on income inequality have been debated, especially they can depend on fiscal tools and other factors. This paper explores whether the allocation of government spending and tax revenue at different levels of government truly alleviates income inequality or inadvertently exacerbates it, considering the presence of the shadow economy – which operates outside formal channels. The study focuses on 23 OECD countries over the period 2002–2020 due to the significant surge in fiscal decentralization, and the growing concerns regarding rising income inequality and the shadow economy within OECD countries. Results show that: (i) tax revenue decentralization increases income inequality; (ii) expenditure decentralization significantly reduces income inequality; (iii) income inequality is positively affected by shadow economy; (iv) the shadow economy intensifies the detrimental effect of tax revenue decentralization on income equality, and it weakens the beneficial effect of expenditure decentralization on income equality; (v) the threshold is 18.53%, meaning that expenditure decentralization abates income inequality as long as the shadow economy is below this threshold, but above this level, expenditure decentralization exacerbates income inequality. These findings suggest that tax revenue decentralization may not be the silver bullet for combating income inequality, whereas expenditure decentralization holds promise when the shadow economy is controlled. These insights call for cautious policymaking in the realm of fiscal decentralization, particularly in the context of the shadow economy, to foster a more equitable future. [ABSTRACT FROM AUTHOR]

This article explores the role of fiscal institutions for local land use. It argues that tax-base mobility results in an incentive to expand commercial and residential land use, which is mitigated by fiscal redistribution. These predictions are investigated empirically using a data set of German municipalities. To identify differences in the exposure to fiscal redistribution, I exploit institutional characteristics of fiscal equalization grants using a regression-discontinuity analysis. The results support the role of fiscal incentives for local land use regulation, as commercial and residential land use is expanded much faster, and agricultural land use declines more rapidly in municipalities exempted from fiscal redistribution. [ABSTRACT FROM AUTHOR]

This study quantifies intergovernmental transfers' contemporaneous and lagged effects on local tax revenues of districts/municipalities in Indonesia. This study found that transfer as aggregate and unconditional transfers/ Dana Alokasi Umum have crowding-in effects on local tax revenues. Meanwhile, revenue sharing/ Dana Bagi Hasil and conditional transfers/ Dana Alokasi Khusus do not significantly affect the tax revenues of districts/municipalities. In addition, system-Generalized Method of Moments estimation results show that the contemporaneous effects of transfers are more prominent in magnitude than their lagged effects. It indicates that local tax enforcement due to transfers provides a larger portion than the local spending stimulus in determining local revenue increases. Our findings refute the negative stigma that emerged after implementing fiscal decentralization, particularly related to the disincentive effect of transfers on local government efforts to generate their revenues. Therefore, equitably endowing local governments with intergovernmental transfers will improve their accountability and build public trust. [ABSTRACT FROM AUTHOR]

The literature on excise tax rates has provided mixed evidence concerning how partisan ideology affects tax changes. Using a regression discontinuity design and a panel of U.S. states over the period 1970–2019 I find no significant difference in cigarette, distilled spirits, or gasoline excise tax rates between Democratic governors and Republican governors elected by a similar margin. This result is found regardless of whether the governor can run for an additional term or faces a binding term limit. These results are robust to an analysis of the post-southern realignment period, when controlling for southern Democrats, or when analyzing open elections without an incumbent in the running. An implication of this result is that interstate tax competition and the mobility of the tax base dwarfs any ideological differences with respect to excise tax policy. [ABSTRACT FROM AUTHOR]

Many states face challenges in producing accurate forecasts of tax revenue from personal income. Using data from 1996 to 2019, we look at how growth in the various base components of personal income influence the accuracy of a state's forecast of revenue from personal income taxation. We consistently find growth in capital gains, which has the highest year-to-year volatility among personal income components, to be associated with a state underestimating its actual revenues from personal income by at least 2 percentage points. [ABSTRACT FROM AUTHOR]

The tax autonomy of Nigeria’s three tiers of government is examined in this study to estimate the value of revenue fiscal decentralization in increasing citizens’ social welfare. Nigeria is a developing country that follows fiscal federalism by allocating resources to the three tiers of government and equally allowing them specific amounts of tax revenue collection based on the requirements of the Federal Republic of Nigeria’s 1999 constitution’s second schedule part II. The main goal is to affect social development in all parts of the country. Thus, this study uses secondary data from 2007 to 2020 and analyzes it using a multiple regression approach to determine the influence of each tier of government’s tax autonomy on residents’ social welfare. According to the findings of this research, the federal government’s fiscal autonomy empowers social development more than the other two levels of government (state and local governments). The policy conclusion is that the tax autonomy of the three tiers of government may need to be reassessed in order to offer additional taxing powers to lower-level governments for better economic growth prospects. As a result, the research advises revamping the country’s overall fiscal system in order to promote social growth across states, local governments, and the whole nation.

Inadequate revenue generation impedes economic growth. It retards the overall economic growth and behavior. It delays government decision formulation on expenditure. The issue has lacked attention from academics. Consequently, this study focuses on the relationship between revenue generation and economic growth in Nigeria. It employed time series data sourced from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) from 1981–2018. Contributing to the debate on the revenue mobilization and economic growth nexus, the study used multiple regression to estimate the impact of government revenue mobilization on economic growth in Nigeria. Findings revealed that domestic debts and non-oil (NOIL) revenue positively and significantly impact economic growth while external debts and oil revenue revealed otherwise. Based on the findings, the study concluded that government revenue impacts economic growth. Consequently, the study recommends economic diversification through strategic programs aimed at enhancing growth rather than remaining a mono-economy. Furthermore, it recommends that the government should review the existing revenue mobilization strategy– especially the multifarious non-oil revenue bases to ensure improved revenue remittances. The study also recommended the need to formulate policies that will guarantee better utilization of both domestic and foreign loans with the aim of increasing productivity and enhancing revenue mobilization. It is also recommended that borrowing should be considered a last resort to fund government projects, and where it is unavoidable such borrowing should be limited to domestic debt (DD).

We investigate how revenues from taxing hydropower production affect local fiscal policy with data for municipalities in Switzerland in 1987–2015. Our instrumental variable approach uses exogenous variation in these revenues by combining the municipality-specific hydropower potential with the varying federally mandated ceiling on taxation of hydropower production. We find negative effects on tax rates and tax revenues, but insignificant spending effects. These results provide fresh evidence on how local authorities use exogenous revenues and on the flypaper effect for a setting with strong local fiscal autonomy and participatory institutions. [ABSTRACT FROM AUTHOR]

This paper evaluates the price and consumption effects of the first municipal soda tax imposed in the United States. Using high-resolution scanner data and data-driven approaches to select comparison units for counterfactual analysis, we estimate the tax has no effect on prices or consumption at drugstores, but increases supermarket prices of some soda products, constituting a minority of soda consumption. We estimate UPC-level pass through rates and find that there is significant heterogeneity across UPCs, much of which is explained by brand and size; average UPC-level pass through estimates in the supermarket range between 19% and 23%. We find limited evidence of reduced supermarket purchases of soda in the taxed jurisdiction. Half of these reduced purchases are substituted to just outside the taxed jurisdiction. Retailers' limited price responses are attributed to the localness of the tax; other research studying the Philadelphia soda tax has demonstrated more substantial pass-through in this much larger jurisdiction. [ABSTRACT FROM AUTHOR]

The sports facility amenity theory predicts that when facility sites change, home prices nearer the prior site decline while home prices nearer the new site increase. Using home sales data in the vicinity of two proposed facility sites for the Golden State Warriors in San Francisco, the data are generally supportive of the amenity theory. The study also shows that Euclidean and walking distance can yield dissimilar treatment effect sizes, thus compelling researchers to justify their distance measurement choice. Finally, the data provide weak support that home buyers respond to changes in facility re-designs towards increased public benefits. [ABSTRACT FROM AUTHOR]

Abstract This study empirically examines the stimulatory effect of federal transfers in India using a panel dataset of 21 states for the period 2005–06 to 2019–20. In mapping the stimulus effect, we test the validity of the ‘extended flypaper effect’, where lumpsum federal transfers tend to increase the state’s public spending more than a corresponding increase in its own revenue and borrowing resources. The results suggest that the marginal effects of state own-source revenues and borrowing on India’s sub-national non-capital expenditure outweigh those of federal transfers. Therefore, the existence of flypaper effects at the sub-national level in India cannot be ruled out. However, at the disaggregate level, 10 of 21 states report a stimulatory effect of lumpsum federal transfers on state spending. Of these, nine states are mapped to the capital expenditure account and one state to the revenue account. The empirical results also reveal the presence of fiscal illusion i.e., the systematic misperception of fiscal parameters. While the fiscal illusion produced by federal transfers is not a concern, the debt-driven fiscal illusion is worrisome in India as most states’ non-development revenue expenditure is fuelled by borrowed money. Hence corrective action is needed to find a strategy of optimal mix of three stimulus factors for these states namely states’ own revenue, federal transfers and state borrowing. [ABSTRACT FROM AUTHOR]

We study the interaction between tax advantages for municipal bonds and the market structure of auctions for these bonds. We show that this interaction can limit a bidder's ability to extract information rents and is a crucial determinant of state and local governments' borrowing costs. Reduced-form estimates show that increasing the tax advantage by 3 pp lowers mean borrowing costs by 9–10 |$\%$|⁠. We estimate a structural auction model to measure markups and to illustrate and quantify how the interaction between tax policy and bidder strategic behaviour determines the impact of tax advantages on municipal borrowing costs. We use the estimated model to evaluate the efficiency of Obama and Trump administration policies that limit the tax advantage for municipal bonds. Because reductions in the tax advantage inflate bidder markups and depress competition, the resulting increase in municipal borrowing costs more than offsets the tax savings to the government. Finally, we use the model to analyse a recent non-tax regulation that affects entry into municipal bond auctions. [ABSTRACT FROM AUTHOR]

The traditional literature on fiscal federalism prescribes centralization of redistributive tasks to avoid welfare- or tax-induced migration. More recent work shows that even if the redistributive part of taxation, namely progressivity, is set by an upper-layer government and lower-layer governments only compete via a tax multiplier, income sorting can flatten effective tax progressivity. We argue that upper-layer governments anticipate the impact of local income sorting and strategically adjust their statutory tax schedules. The mobility of the income tax base sets limits to such strategic behavior. We apply causal machine learning methods to identify the effects of decentralization on the statutory tax structure in Switzerland. More decentralized cantons implement more redistributive statutory tax schedules for the least-mobile household types. [ABSTRACT FROM AUTHOR]

Lockdowns imposed by the European Union (EU) Member States produced significant consequences in the form of losses to companies, which is why the Member States decided to assist businesses from public funds. This paper aims to identify and initially assess the implementation of schemes under which coronavirus disease-2019 (COVID-19)-related state aid was granted in Poland in 2020 for different instruments and beneficiary sizes. The idea was to find out how well aforementioned schemes responded to the needs of companies affected the most by the COVID-19-inflicted crisis. To this end, statistical analysis was deployed to learn about the share of individual groups of businesses of different sizes in support instruments granted in relation with COVID-19 by type of aid. The study helped to demonstrate that Polish aid schemes approved by the European Commission in 2020 assisted mainly micro- and small-sized companies, which usually suffered from poor liquidity, by predominantly soft instruments.

Professional sports teams commonly reevaluate their location decisions based on the prospect of building new, more attractive, stadiums. Even though a large economic literature warns about the modest (and possibly negative) effects on the local economy of hosting a professional sports team, the economic effects of professional teams and stadiums remain blurry for the general public, and cities in the United States continue to compete to lure teams with generous public subsidies. This article integrates several contributions of the literature into one cohesive and simple framework based on cost–benefit analysis, and provides estimations of the average local economic effects of teams in the four biggest professional leagues in the United States. If professional sports games do not attract visitors from other cities, or if players and owners do not spend a significant share of their income in the area, hosting a team can negatively affect the local economy. [ABSTRACT FROM AUTHOR]