artículo
Tax decentralization notwithstanding regional disparities
Fecha
2021Registro en:
10.1016/j.jue.2021.103346
1095-9068
0094-1190
WOS:000651620000003
Autor
Bellofatto, Antonio Andres
Besfamille, Martin
Institución
Resumen
In assessing tax decentralization optimality, a dilemma between efficiency and redistribution emerges: tax decentralization enhances fiscal discipline, but may also widen interregional disparities by triggering tax competition over mobile tax bases. We present a model that formalizes this trade-off, and find that tax decentralization can be optimal even under Rawlsian social preferences which only weight the welfare of the poorest region in the economy. We also revisit the empirical relationship between tax decentralization and regional disparities. Our estimates uncover a hump-shaped profile, which can be compatible with our normative prescriptions when social aversion for interregional inequality is low.