vogue. Both in the industrialized and in the developing world, nations are turning to devolution to improve the per- formance of their public sectors. In the United States, the central government has turned back significant portions of federal authority to the states for a wide range of major programs, including wel- fare, Medicaid, legal services, housing, and job training. The hope is that state and local governments, being closer to the people, will be more responsive to the particular preferences of their con- stituencies and will be able to find new and better ways to provide these ser- vices. In the United Kingdom, both Scot- land and Wales have opted under the Blair government for their own regional parliaments. And in Italy the movement toward decentralization has gone so far as to encompass a serious proposal for the separation of the nation into two in- dependent countries. In the developing world, we likewise see widespread inter- est in fiscal decentralization with the ob- jective of breaking the grip of central planning that, in the view of many, has failed to bring these nations onto a path of self-sustaining growth. But the proper goal of restructuring the public sector cannot simply be de- centralization. The public sector in nearly all countries consists of several different levels. The basic issue is one of aligning responsibilities and fiscal in- struments with the proper levels of gov- ernment. As Alexis de Toqueville ob- served more than a centuty ago, "The federal system was created with the in- tention of combining the different ad- vantages which result from the magni- tude and the littleness of nations" (1980, v. I, p. 163). But to realize these "dif- ferent advantages," we need to under- stand which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government. This is the sub- ject matter of fiscal federalism. As a subfield of public finance, fiscal feder- alism addresses the vertical structure of the public sector. It explores, both in normative and positive terms, the roles of the different levels of government and the ways in which they relate to one another through such instruments as intergovernmental grants.2

/pdf/an-essay-on-fiscal-federalism-10yjc9cqdb.pdf

An Essay on Fiscal Federalism

A central message of the tax competition literature is that independent governments engage in wasteful competition for scarce capital through reductions in tax rates and public expendi- ture levels. This paper discusses many of the contributions to this literature, ranging from early demonstrations of wasteful tax com- petition to more recent contributions that identify efficiency- enhancing roles for competition among governments. Such roles involve considerations not present in earlier models, including im- perfectly-competitive market structures, government commitment problems, and political economy considerations.

/pdf/theories-of-tax-competition-42jqcatw8x.pdf

Theories of Tax Competition

https://www.socsci.uci.edu/~jkbrueck/course%20readings/Econ%20272B%20readings/zodrow-mieszkowski.pdf

Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods

Environmental Economics: A Survey

https://dspace.mit.edu/bitstream/handle/1721.1/99175/Hanlon_A%20review%20of%20tax%20research.pdf;sequence=1

A review of tax research

on the theory of state and local public finance is the seminal paper by Charles Tiebout (1956) Tiebout constructed a multijurisdictional model in which independent local governments offer a wide variety of expenditure and tax policies, and perfectly mobile consumers reveal their preferences for local public goods through their choice of residential community He argued that, under such circumstances, local public service provision would be efficient The Tiebout model has formed the basis of a vast number of subsequent articles in the state and local public finance literature and has also been very influential in urban and regional economics The efficiency properties of various Tiebout-type models of local public good provision have been examined, and the role of politics in these models has been debated at length in this literature Of more direct relevance to this paper, however, is the fact that although Tiebout had little to say directly about taxation (simply assuming the existence of head taxes), subsequent analyses have used adaptations of this model to examine the effects of local head taxes, land taxes, and property taxes It is the literature on the efficiency and distributional effects of alternative local taxes that is the subject of this survey 1

Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes

This paper examines the tax competition literature and attempts to draw out its implications for the debate on corporate tax coordination within the EU. It begins with the early basic tax competition model, which derives conditions under which underprovision of public services occurs and tax harmonization unambiguously improves welfare for all states in the union. The paper then turns to a wide variety of extensions of this model, some of which reinforce its results and others that yield rather different conclusions. The analysis concludes by considering the implications of the tax competition literature for the debate on EU corporate tax coordination, drawing on some recent efforts to synthesize this vast literature by estimating the efficiency costs of tax competition and simulating the efficiency gains from various tax coordination palns.

Tax Competition and Tax Coordination in the European Union

The wait for the forthcoming Treasury report on corporate and individual tax integration has increased interest in the question of whether the rf traditional " view or the "new" view of dividend taxes more accurately describes their effects. Unfortunately , despite the fact that the "new" view is actually nearly twenty years old , this issue-which is critical both to evaluating the need for integration and to designing integration schemes- is still unresolved in the literature. This paper summarizes the debate , focusing on the theoretical foundations of both the traditional and new views and on recent empirical tests that distinguish between the competing views.

ON THE "TRADITIONAL" and "NEW" VIEWS OF DIVIDEND TAXATION**

This paper surveys the literatures on two questions that are essential to the discussion of mobility and taxation that is the focus of this special issue of the National Tax Journal. First, it examines the extent to which capital is mobile internationally, focusing on empirical evidence on the tax sensitivity of foreign investment, the incidence of the corporate income tax, and savings-investment correlations. Second, it considers the extent to which the mobility of capital has resulted in interjurisdictional capital tax competition, drawing on the theoretical tax competition literature, empirical evidence on corporate income tax rates, the strategic tax competition literature, and the relatively new literature examining interjurisdictional competition in the form of allowing tax avoidance.

https://www.ntanet.org/NTJ/63/4/ntj-v63n04p865-901-capital-mobility-capital-tax.pdf

George R. Zodrow

Papers

Pigou, Tiebout, Property Taxation, and the Underprovision of Local Public Goods

Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes

Tax Competition and Tax Coordination in the European Union

ON THE "TRADITIONAL" and "NEW" VIEWS OF DIVIDEND TAXATION**

Capital mobility and capital tax competition