On the Effects of Federal Capital Taxation on Growing and Declining Areas
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چکیده
It has often been claimed that measures designed to stimulate capital formation at the national level will accelerate the decline of regions that are not growing. A number of simple models are employed to evaluate this claim, and it is found that the effect of national subsidies is ambiguous. Further, it is shown that on average the form of capital stimulus used in the Economic Recovery Tax Act of 1981 will tend to help higher-tax regions, which tend to be those that have experienced relative economic declines in recent years.
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