February 6, 2001 In 1991, the state enacted a major change in the state and local government relationship, known as realignment. In the areas of mental health, social services, and health, realignment transferred programs from the state to county control, altered program cost-sharing ratios, and provided counties with dedicated tax revenues from the sales tax and vehicle license fee to pay for ...

Governments in emerging markets often behave like a “tormented insurer,” who would like to smooth government outlays given the randomness of public revenues in an imperfect world where the only public debt instrument is a non-state-contingent bond denominated in units of tradable goods. How can a fiscal authority tell if the stock of public debt is consistent with fiscal solvency in this enviro...

Abstract_______________________________________________________________________ The literature concerning the U.S. federal deficit and its implications for the federal government's intertemporal budget constraint seems to have reached a tentative conclusion that starting with the Reagan administration the U.S. federal government has violated its intertemporal budget constraint. Recently the pop...

Imperfect altruism between generations may lead to insufficient capital accumulation. We study the welfare consequences of taxing the rent on a fixed production factor, such as land, in combination with age-dependent redistributions as a remedy. Taxing rent enhances welfare by increasing capital investment. This holds for any tax rate and recycling of the tax revenues except for combinations of...

As the centerpiece of its “growth package,” the Bush Administration proposes to eliminate taxes that individuals pay on dividend payments they receive from corporations. These dividends would receive tax-free treatment to the extent that they have been paid from profits subject to the corporate income tax. For individuals who hold shares in companies that do not pay dividends, the proposal woul...

In markets where transactions are governed by contractual incompleteness, revealed intentions to evade taxes may affect market performance. We experimentally examine the impact of tax evasion attempts on the performance of credence goods markets, where contractual incompleteness results from asymmetric information on the welfare maximizing quality of the good. We find that tax evasion attempts ...