Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76557
Authors: 
Koethenbuerger, Marko
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper 1180
Abstract: 
Federal fiscal arrangements are argued to give rise to tacit collusion among competing Leviathans (Brennan and Buchanan, The Power to Tax, CUP, 1980). Though frequently encountered in academic and policy discussions, the cartelization hypothesis has rarely been scrutinized formally. This paper explores the effect of federal equalizing transfers on Leviathans engaged in tax competition. Contrary to the hypothesis, equalization is found to potentially complement tax competition in taming the Leviathan by implicitly taxing tax revenues extracted by the Leviathan. Thus, transfers might be an appropriate constitutional provision against fiscal expropriation.JEL classification: H7, H1, H20
Subjects: 
Leviathan
fiscal transfers
fiscal competition
federalism
constitution
Document Type: 
Working Paper

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