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Joshua Hall
''Fiscal competition and tax instrument choice: the role of income inequality''
( 2006, Vol. 8 No.12 )
School districts in Ohio have the choice of two tax instruments with which to raise revenue: the property tax and a residence-based income tax. Economic theory predicts that local governments, if given the choice, would prefer to diversify their tax base to reduce the political costs associated with excessive reliance on one tax. Why then, do some school districts not utilize the income tax? This paper extends earlier work on this issue by showing that income inequality is negatively associated with the choice of an income tax.
JEL: H7 - State and Local Government; Intergovernmental Relations: General
Manuscript Received : Jun 28 2006 Manuscript Accepted : Oct 05 2006

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