Multi-jurisdictional Income Tax Competition and the Provision of Local Public Goods (Preliminary and Incomplete)

نویسندگان

  • Andrea Lockhart
  • Filomena Garcia
  • Daniela Puzzello
چکیده

In this paper, an income tax competition model is considered, in which two local governments collect income taxes for both redistributional purposes, as well as to fund the provision of local public goods. The local governments seek to maximize the average utility of their residents, while a finite population of perfectly mobile, heterogeneous agents make labor/leisure and residency decisions, so as to maximize individual utility. This is a problem of multiple principals and multiple agents, with an added requirement of budget balancedness. We will attempt to use both the mechanism design problem as well as the menu design problem to prove existence of an optimal income tax-public goods mechanism, as well as to characterize the solutions. JEL Classification Numbers: H410, H710, H730 ∗Department of Economics, Indiana University, 105 Wylie Hall, 100 S. Woodlawn, Bloomington, IN 47405, e-mail: [email protected]. 3rd Year Committee Members: Frank Page, Jr. (chair), Filomena Garcia, Daniela Puzzello

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تاریخ انتشار 2012