Nations, states, and localities compete in designing their tax systems, seeking in part to attract mobile individuals, firms, and transactions. Rising economic integration, both within and across nations, places growing pressure on tax structure that were designed for a world with less economic mobility. There have been many proposals to mitigate tax competition across countries and across states and cities within countries, particularly with regard to capital income taxation. The absence of an overarching international tax authority has confounded cross-country tax coordination. In federal settings such as Germany, Switzerland, and the United States, however, sub-federal governments have often engaged in interjurisdictional cooperation. There nevertheless remain important open questions regarding the impact of these initiatives on fiscal competition, the allocation of economic activity across places, and household welfare.
To promote research on the economic effects of interjurisdictional cooperation, how such cooperation arises and is sustained, and what happens when it fails, the National Bureau of Economic Research (NBER), with generous support from Arnold Ventures, is carrying out a project on these issues. NBER will host a research conference on March 16-17, 2023, in Cambridge, Massachusetts. The organizers are David Agrawal (University of Kentucky), James Poterba (MIT and NBER), and Owen Zidar (Princeton University and NBER). The project seeks to bring together researchers in accounting, economics, finance, law, and political science who approach issues of tax competition and cooperation from different perspectives.
Research on many aspects of jurisdictional cooperation in setting tax policies is welcome. Papers that describe institutional structures, investigate the incentives for various participants in the policy process to join cooperative structures, and analyze the impact of cooperative agreements on economic outcomes are all welcome. A partial list of mechanisms that jurisdictions use in response to tax competition includes: tax harmonization, minimum/maximum tax rates, sourcing rules, tax and expenditure limitations, restrictions on bidding for firms, voluntary and forced intermunicipal cooperation, mutual consultation, joint operation of municipal agencies, amalgamation, fiscal centralization, tax treaties, constitutional restrictions, and interjurisdictional compacts or agreements. The program will include eight papers on a range of issues.
The organizers welcome research on issues including, but not limited to:
• The effect of different forms of inter-governmental cooperation on tax rates, tax revenues, the distribution of tax liabilities, public service provision costs, economic growth, and other variables that affect jurisdictional welfare.
• The determinants of coalition formation, including which jurisdictions cooperate with each other, how interstate agreements are reached, which jurisdictions are holdouts, and whether certain types of coalitions of jurisdictions are more stable or impactful than others.
• The impact of supra-jurisdictional fiscal rules, such as tax and expenditure limitations, on the size of governments and on the adoption of policies that circumvent these rules by shifting to competition on dimensions not governed by these rules.
• The consequences of interjurisdictional tax treaties, such as The Kansas-Missouri Subsidy Armistice or The Phase Out Corporate Giveaways Interstate Compact, on bidding for firms, as well as on the location of firms, individuals, and profits.
• The role of jurisdictional amalgamations on the delivery of public services and the level of tax rates and revenues.
• The influence of federal grants on tax competition and the role of such grants in equalizing outcomes across jurisdictions.
• The obstacles to jurisdictional cooperation, the factors that contribute to some jurisdictions following holdout strategies, and the effects of federal incentive programs that encourage cooperation.
Submissions of empirical and theoretical research on interjurisdictional cooperation, including papers by scholars who are early in their careers, who are not NBER affiliates, and who are from under-represented groups, are welcome. To be considered for inclusion on the program, papers must be uploaded by 11:59pm ET on September 15, 2022 via the following link:
The organizers will consider completed papers as well as proposals for papers that could be completed in time for the March 2023 conference. The papers that are presented at the conference will be published by the University of Chicago Press in a proceedings volume edited by the organizers; please do not submit papers that are not available for such publication. The NBER will provide a modest honorarium for the authors of each research team and will cover the costs of conference participation for up to two authors per paper; all co-authors will be invited to attend.
Questions about this conference may be addressed to firstname.lastname@example.org.