You are not currently logged in.
Access JSTOR through your library or other institution:
The Political Trend in Local Government Tax Setting
Vol. 139, No. 1/2 (Apr., 2009), pp. 125-134
Published by: Springer
Stable URL: http://www.jstor.org/stable/40270749
Page Count: 10
You can always find the topics here!Topics: Politicians, Income taxes, Taxes, Local government, Social interaction, Politics, Political ideologies, Political parties, Tax rates, Neighborhoods
Were these topics helpful?See somethings inaccurate? Let us know!
Select the topics that are inaccurate.
Preview not available
Previous fiscal studies have paid little attention to the effects of social interaction on local tax setting. This paper seeks to fill this gap by developing a theoretical model in which politicians belonging to the same party interact with each other in order to draw inferences about ideology. This phenomenon produces a mimic effect which is called the political trend. The results of the analysis show that the political trend gives rise to higher income tax rates and to tax mimicking at the local government level. The framework developed also makes it possible to discriminate between Leviathan-type and welfarist-type politicians. The results show that the former are more sensitive than the latter to changes in the average income tax rate of their peers. Moreover, Leviathan-type politicians are less sensitive than benevolent ones to changes in the central government's income tax rate.
Public Choice © 2009 Springer