Fiscal Efficiency of Income Taxes

Fiscal Federalism and Optimal Income Taxes

In federal countries, such as the United States, state and local governments play an important role. They provide many different types of local public goods and services and are able to tailor the amount and quality of these goods to the preferences of their constituencies. To provide these services, state and local governments must raise tax revenues from their residents using a menu of differ...

Fiscal Policy: Taxes, Distribution of National Income, and Social Security

How Fiscal Decentralization Flattens Progressive Taxes

We study the tension between fiscal decentralization and progressive taxation. We present a multi-community model in which households differ in incomes and housing preferences and in which the local income tax rate is a function of an exogenous progressive tax schedule and an endogenous local tax shifter. The progressivity of the tax schedule induces a self-sorting process that results in subst...

Interaction Of Income Distribution, Taxes And Economic Growth

A comparison of social security taxes and Federal income taxes.

In recent years, with the implementation of the tax rate increases and ad hoc earnings base increases included in the 1977 Amendments to the Social Security Act, many observers have noted that social security taxes (for the old-age and survivors insurance (OASI), disability insurance (DI), and hospital insurance (HI) programs combined) now exceed Federal income taxes for many families. The ques...