Dynamic Tax Externalities and the U.S. Fiscal Transformation

Research output: Contribution to journalJournal articlepeer-review

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Dynamic Tax Externalities and the U.S. Fiscal Transformation. / Gonzalez-Eiras, Martin; Niepelt, Dirk.

In: Journal of Monetary Economics, Vol. 114, 10.2020, p. 144-158.

Research output: Contribution to journalJournal articlepeer-review

Harvard

Gonzalez-Eiras, M & Niepelt, D 2020, 'Dynamic Tax Externalities and the U.S. Fiscal Transformation', Journal of Monetary Economics, vol. 114, pp. 144-158. https://doi.org/10.1016/j.jmoneco.2019.02.007

APA

Gonzalez-Eiras, M., & Niepelt, D. (2020). Dynamic Tax Externalities and the U.S. Fiscal Transformation. Journal of Monetary Economics, 114, 144-158. https://doi.org/10.1016/j.jmoneco.2019.02.007

Vancouver

Gonzalez-Eiras M, Niepelt D. Dynamic Tax Externalities and the U.S. Fiscal Transformation. Journal of Monetary Economics. 2020 Oct;114:144-158. https://doi.org/10.1016/j.jmoneco.2019.02.007

Author

Gonzalez-Eiras, Martin ; Niepelt, Dirk. / Dynamic Tax Externalities and the U.S. Fiscal Transformation. In: Journal of Monetary Economics. 2020 ; Vol. 114. pp. 144-158.

Bibtex

@article{2a75537df6bd4dafa6521c95e8cf7df0,
title = "Dynamic Tax Externalities and the U.S. Fiscal Transformation",
abstract = "We propose a theory of tax centralization in politico-economic equilibrium. Taxation has dynamic general equilibrium implications which are internalized at the federal, but not at the regional level. The political support for taxation therefore differs across levels of government. Complementarities on the spending side decouple the equilibrium composition of spending and taxation and create a role for inter governmental grants. The model provides an explanation for the centralization of revenue, introduction of grants, and expansion of federal income taxation in the U.S. around the time of the New Deal. Quantitatively, it accounts for approximately 30% of the federal revenue share's doubling in the 1930s, and for the long-term increase in federal grants.",
keywords = "Faculty of Social Sciences, Fiscal federalism, tax centralization, grants, politico-economic equilibrium",
author = "Martin Gonzalez-Eiras and Dirk Niepelt",
year = "2020",
month = oct,
doi = "10.1016/j.jmoneco.2019.02.007",
language = "English",
volume = "114",
pages = "144--158",
journal = "Journal of Monetary Economics",
issn = "0304-3932",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Dynamic Tax Externalities and the U.S. Fiscal Transformation

AU - Gonzalez-Eiras, Martin

AU - Niepelt, Dirk

PY - 2020/10

Y1 - 2020/10

N2 - We propose a theory of tax centralization in politico-economic equilibrium. Taxation has dynamic general equilibrium implications which are internalized at the federal, but not at the regional level. The political support for taxation therefore differs across levels of government. Complementarities on the spending side decouple the equilibrium composition of spending and taxation and create a role for inter governmental grants. The model provides an explanation for the centralization of revenue, introduction of grants, and expansion of federal income taxation in the U.S. around the time of the New Deal. Quantitatively, it accounts for approximately 30% of the federal revenue share's doubling in the 1930s, and for the long-term increase in federal grants.

AB - We propose a theory of tax centralization in politico-economic equilibrium. Taxation has dynamic general equilibrium implications which are internalized at the federal, but not at the regional level. The political support for taxation therefore differs across levels of government. Complementarities on the spending side decouple the equilibrium composition of spending and taxation and create a role for inter governmental grants. The model provides an explanation for the centralization of revenue, introduction of grants, and expansion of federal income taxation in the U.S. around the time of the New Deal. Quantitatively, it accounts for approximately 30% of the federal revenue share's doubling in the 1930s, and for the long-term increase in federal grants.

KW - Faculty of Social Sciences

KW - Fiscal federalism

KW - tax centralization

KW - grants

KW - politico-economic equilibrium

U2 - 10.1016/j.jmoneco.2019.02.007

DO - 10.1016/j.jmoneco.2019.02.007

M3 - Journal article

VL - 114

SP - 144

EP - 158

JO - Journal of Monetary Economics

JF - Journal of Monetary Economics

SN - 0304-3932

ER -

ID: 236222525