The Relationship Between State Income Taxes and Local Property Taxes: Education Finance in New Jersey

Abstract - New Jersey enacted an income tax in 1976 in response to a State Supreme Court ruling that held that local taxation alone violated the requirement of the State Constitution that all children receive a “thorough and efficient” education. The law required that revenues from the income tax be dedicated solely to relief of local property taxes. Most of the relief is given as aid to local school districts. This paper offers both a theoretical and an empirical analysis of the effect on local property taxes of changes in aid resulting from the 1990 increase in the income tax enacted under Governor Jim Florio and the beginning of the 1994 decrease in income taxes enacted under Governor Christine Whitman. The theoretical analysis is based on general equilibrium models developed over the previous two decades. The results indicate (1) a flypaper effect for both increases and decreases in aid, which may be more pronounced for decreases, and (2) that higher income districts choose to increase property taxes more than other districts when the income tax is reduced.education finance, grants, federalism, flypaper effect

Taxation and FDI In Developed and Developing Countries

In this paper, we first look at an overview of FDI, noting certain differences between developed and developing countries, differences in the composition of FDI within a country, and differences in the geographic origin of inward FDI. We also note differences in FDI incentives between developing and developed countries. We then turn to a discussion of the complicated ways in which FDI incentives can be affected by the international tax systems of both home and host countries. Incentives affecting investment decisions are treated first, followed by a discussion of income shifting incentives. We conclude by summarizing the challenges that lie ahead.Working Paper Number 04-39

Owning your own home: reality or myth

The focus of the white paper will be to highlight the housing challenges that people in the New England region and in the United States face. Affordability, sustainability, people needs, societal needs, environmental needs, economic incentives and impact of government policies are just a few of the topics that will be explored

On the Optimal Design of Disaster Insurance in a Federation

Recent experience with disasters and terrorist attacks in the US indicates that state and local governments rely on the federal sector for support after disasters occur. But these same governments are responsible for investing in infrastructure designed to reduce vulnerability to natural and man-made hazards. This division of responsibilities – state governments providing protection from disasters and federal government providing insurance against their occurrence – leads to the tension that is at the heart of our analysis. We explore these tensions building on the model of Persson and Tabellini (1996). We show that when the federal government is committed to full insurance against disasters, states will have incentives to underinvest in costly protective measures. We then show that when the central government cannot verify state investment choices, the optimal insurance system would be designed to reward states that succeed in avoiding disasters and punish those that do not, thereby giving states an incentive to increase investment in protective infrastructure. However, this raises the question of whether the central government can credibly commit to such a scheme, and we find in a simple political model that it cannot. In our political model, the central government will decrease transfers ex-post if a state provides protective infrastructure that increases its expected uncertain income, generating a soft-budget constraint for states. This provides an additional incentive for states to underinvest in protective infrastructure. We discuss these results in light of disaster policy in the US.

On the Optimal Design of Disaster Insurance in a Federation

Recent experience with disasters and terrorist attacks in the US indicates that state and local governments rely on the federal sector for support after disasters occur. But these same governments are responsible for investing in infrastructure designed to reduce vulnerability to natural and man-made hazards. This division of responsibilities – state governments providing protection from disasters and federal government providing insurance against their occurrence – leads to the tension that is at the heart of our analysis. We explore these tensions building on the model of Persson and Tabellini (1996). We show that when the federal government is committed to full insurance against disasters, states will have incentives to underinvest in costly protective measures. We then show that when the central government cannot verify state investment choices, the optimal insurance system would be designed to reward states that succeed in avoiding disasters and punish those that do not, thereby giving states an incentive to increase investment in protective infrastructure. However, this raises the question of whether the central government can credibly commit to such a scheme, and we find in a simple political model that it cannot. In our political model, the central government will decrease transfers ex-post if a state provides protective infrastructure that increases its expected uncertain income, generating a soft-budget constraint for states. This provides an additional incentive for states to underinvest in protective infrastructure. We discuss these results in light of disaster policy in the US.

Tax competition and tax structure in open federal economies: evidence from OECD countries with implications for the European Union

Tax competition arguments suggest that governements that operate in an open economy (such as local governments) should not and will not rely on non-benefit taxes, such as the income tax. Yet we observe reliance on income taxes by local governments in many countries, and such reliance changes over ime. Evidence from a panel data set of 13 OECD countries over the period 1975-1984 suggest that competition between levels of government (resulting in a vertical fiscal externality) and between governments at the same level (resulting in a horizontal fiscal exterbality) provide some economic rationale for these changes. Moreover, the evidence indicates that the vertical and horizontal fiscal externalities interact. These results have some interesting implications for fiscal policy in the European Union, particularly as the EU continues to evolve. One implication for the EU is that enlargement that increases tax base disparities within the EU (and is not accompanied by an EU-level income tax) will tend to lower national income tax rates, although this must be qualified because it also depends on the mobility of the population. A second implication is that fiscal expansion of the EU to include an EU-level income tax may tend to lower the reliance of national government om income taxes though the vertical externality, but may also tend to equalize tax bases across countries, and so increase reliance on national income taxes though the horizontal externality. --Tax competition,Tax structure,Fiscal federalism,International taxation

Development of dispersion strengthened tantalum base alloy Quarterly progress report no. 6, Feb. 20 - May 19, 1965

Dispersion strengthened tantalum base alloys for use in advanced spacecraft power systems - metallurg

Development of dispersion strengthened tantalum base alloy Quarterly progress report, 20 Feb. - 20 May 1967

Creep properties, brittleness, hardness, and microstructure of dispersion strengthed tantalum base alloy

Development of dispersion strengthened tantalum base alloy Eighth quarterly progress report, 20 Aug. - 20 Nov. 1965

Phase identification and morphology studies of dispersion hardened tantalum base alloys for advanced space power use