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Horizontal and Vertical Tax Competition in Florida Local Governments

Author

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  • Yonghong Wu

    (University of Illinois at Chicago, yonghong@uic.edu)

  • Rebecca Hendrick

    (University of Illinois at Chicago)

Abstract

This is an empirical exploration of tax competition among Florida local governments. We estimate a spatial lag reaction function for property tax rate of Florida municipal governments in 2000 and 2004. The level of ``neighborliness'' is measured as spatial distance between geographical centers of municipalities. The weight matrix excludes the municipalities locating within the same county to eliminate their common responses to higher-tier government property tax policy. By including the property tax rate levied by other local governments (counties, school districts), we find that tax competition exists for property tax among neighboring municipalities (horizontal) as well as between municipalities and other local governments (vertical). The response of municipal governments is negative to county's property tax rate but positive to school district's property tax rate.

Suggested Citation

  • Yonghong Wu & Rebecca Hendrick, 2009. "Horizontal and Vertical Tax Competition in Florida Local Governments," Public Finance Review, , vol. 37(3), pages 289-311, May.
    • Handle: RePEc:sae:pubfin:v:37:y:2009:i:3:p:289-311
    DOI: 10.1177/1091142109332054
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    6. Michael S. Hayes, 2015. "The Differential Effect of the No Child Left Behind Act (NCLB) on States’ Contributions to Education Funding in States with Binding School District Tax and Expenditure Limitations," Public Budgeting & Finance, Wiley Blackwell, vol. 35(1), pages 49-72, March.
    7. Spencer T. Brien & Wenli Yan, 2020. "Are Overlapping Local Governments Competing With Each Other When Issuing Debt?," Public Budgeting & Finance, Wiley Blackwell, vol. 40(2), pages 75-92, June.
    8. Douglas A. Carr, 2011. "The Intergovernmental Fiscal Effects of the Clean Air Act," Public Finance Review, , vol. 39(6), pages 810-830, November.
    9. Sarah E. Larson & Bruce D. McDonald, 2023. "Taxation and citizen choice: The effect of a county charter on property taxes," Public Budgeting & Finance, Wiley Blackwell, vol. 43(1), pages 64-84, March.

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