TY  - JOUR
AU  - Inman,Robert P.
TI  - The Local Decision to Tax: Evidence from Large U.S. Cities
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2921
PY  - 1990
Y2  - May 1990
UR  - http://www.nber.org/papers/w2921
L1  - http://www.nber.org/papers/w2921.pdf
N1  - Author contact info:
Robert P. Inman
Department of Finance
Wharton School
University of Pennsylvania
Philadelphia, PA  19104-6367
Tel: 215/898-8299
Fax: 215/898-6200
E-Mail: inman@wharton.upenn.edu
AB  - The structure of local taxation is an important determinant of the fiscal performance of decentralized public economies. In contrast to our understanding of local government spending, however, we know surprisingly little about how cities and states set taxes. This study specifies and estimates a model of the institutional, political, and economic determinants of the local decision to tax. Redistributive politics is an important determinant of local tax policy, at least for this sample of 41 large U.S. cities during the period 1961-1986. The results cast serious doubt on the validity of the "representative" or average taxpayer approach to behavioral modeling of fiscal policy for large, income diverse governments. The results allow us to predict the effects on local financing of removing federal tax deductibility of local taxes, an issue of current importance in the United States.
ER  -