Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/24312 
Year of Publication: 
1999
Series/Report no.: 
ZEW Discussion Papers No. 99-28
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
Concurrent taxation is a feature of many federal systems. As a consequence of this fact, the tax policy of one level of government affects the tax base of the other. This paper carries out a theoretical analysis of the interdependent tax-setting decisions of federal and regional governments, paying special attention to institutional features that characterise the U.S. federal system in practice and that formally link the taxes employed at various levels of government (i.e.: tax deductibility). The developed hypotheses are tested with data corresponding to the U.S. personal income taxes for the last decade. We find that when the federal government increases taxes, there is a significant positive response of regional taxes.
JEL: 
H21
H3
H77
Document Type: 
Working Paper

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