Premium
Augmenter les impôts par le truchement de la péréquation.
Author(s) -
Smart Michael
Publication year - 2007
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.1365-2966.2007.00448.x
Subject(s) - economics , equalization (audio) , raising (metalworking) , public economics , transfer (computing) , tax reform , econometrics , monetary economics , mathematics , statistics , decoding methods , geometry , parallel computing , computer science
. A simple theory suggests that a common form of federal horizontal equalization grants should cause subnational governments to levy higher tax rates, distorting local tax bases and so increasing federal transfers. To test this, I examine Canadian provincial tax policies in the 1972–2002 period. Consistent with the theory, provinces respond to expansions of equalization transfers by increasing their own tax rates. I estimate that on average tax rates in grant‐receiving provinces were substantially and significantly higher as a consequence of the transfer formula. JEL classification: H21