(
课件网) PUBLIC FINANCE IN A FEDERAL SYSTEM Chapter 22 Background Federal system Fiscal federalism Centralization Centralization ratio = Central government expenditures Total government expenditures 22-* Distribution of All U.S. Expenditures by Government Level 22-* Source: Figures for 1900 through 1980 are from Pommerehne [1977]. Figures after 1980 are computed from various editions of the US Bureau of the Census, Statistical Abstracts of the United States , and from US Bureau of the Census [2012b]. Community Formation Club – voluntary association of people who band together to finance and share some benefit Optimal Club (or community) 22-* The Tiebout Model Voting with your feet Tiebout’s assumptions Government activities generate no externalities Individuals are completely mobile People have perfect information with respect to each community’s public services and taxes There are enough different communities so that each individual can find one with public services meeting her demands The cost per unit of public services is constant so that if the quantity of public services doubles, the total cost also doubles Public services are financed by a proportional property tax Communities can enact exclusionary zoning laws—statutes that prohibit certain uses of land 22-* Tiebout and the Real World Critique of Tiebout Empirical tests 22-* Optimal Federalism What is the optimal allocation of economic responsibilities among levels of government Macroeconomic functions Microeconomic functions 22-* Disadvantages of a Decentralized System Efficiency issues Externalities Local public good Scale economies in provision of public goods Inefficient tax systems Scale economies in tax collection Equity issues 22-* Advantages of a Decentralized System Tailoring outputs to local taxes Fostering intergovernmental competition Experimentation and information in locally provided goods and services 22-* Implications Purely decentralized systems cannot maximize social welfare Dealing with community activities that create spillover effects that are not national in scope Combine communities under a single regional government Pigouvian taxes and subsidies Division of responsibility in public good provision Distributional goals and mobility 22-* Public Education in a Federal System Local control of schools Financing education through property taxation Federal role in education 22-* Property Tax How the property tax works Assessed value Assessment ratio Residential Property Tax Rates (selected cities) City Effective Tax Rate (%) Indianapolis 2.75 Detroit 2.11 Jackson 1.70 New Orleans 1.40 Oklahoma City 1.25 Boston 1.06 Seattle 0.79 New York 0.62 22-* Incidence and Efficiency Effects – The Traditional View – Tax on Land Acres of land Rent per acre of land SL DL P0L DL’ PnL PsL = P0L Price received by landowners falls by amount of the tax 22-* Incidence and Efficiency Effects – The Traditional View – Tax on Land Ta ... ...