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Heterogeneous vertical tax externalities and macroeconomic effects of federal tax changes: the role of fiscal advantage

Abstract:

How do state tax rates respond to federal tax shocks? This paper presents a novel mechanism of heterogeneous vertical tax externalities across state-levels of .scal advantage, showing that tax increases can be expansionary .even without their reinvestment. States rich in natural resources have a .scal advantage in the inter-state competition over production factors which allows them to respond better to increases in federal taxes and, consequently, attract capital from other parts of the nati...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
OxCarre Papers
Publication date:
2015-09-28
Paper number:
160
Keywords:
Pubs id:
1143638
Local pid:
pubs:1143638
Deposit date:
2020-12-15

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