IDEAS home Printed from https://ideas.repec.org/p/cor/louvco/1994069.html
   My bibliography  Save this paper

Interregional Reditribution through Tax Surcharge

Author

Listed:
  • CREMER, Helmuth

    (IDEI and GREMAQ, Universite de Toulouse)

  • MARCHAND, Maurice

    (lAG and CORE, Universite catholique de Louvain)

  • PESTIEAU, Pierre

    (CREPP, Universite de Liege and CORE, Universite catholique de Louvain)

Abstract

This paper considers a utilitarian federal government that attempts to effect some revenue sharing or to finance through taxation some national public good. For reason of asymmetric information, this financing cannot be based on actual regional income nor on regional preferences, as it should be in a first-best setting. The only information available at no cost to federal authorities is the amount of regional public spending. In this setting with two imperfectly observable characteristics, regional income and regional preferences, we derive an optimal tax surcharge that can be viewed as a non linear matching grant scheme. This is done first without and second with the possibility of using costly auditors to acquire more information on regional income.

Suggested Citation

  • CREMER, Helmuth & MARCHAND, Maurice & PESTIEAU, Pierre, 1994. "Interregional Reditribution through Tax Surcharge," LIDAM Discussion Papers CORE 1994069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1994069
    as

    Download full text from publisher

    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1994.html
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Horst Raff & John Wilson, 1997. "Income Redistribution with Well-Informed Local Governments," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(4), pages 407-427, November.
    2. Brito, Dagobert L, et al, 1990. "Pareto Efficient Tax Structures," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 61-77, January.
    3. Kofman, Fred & Lawarree, Jacques, 1993. "Collusion in Hierarchical Agency," Econometrica, Econometric Society, vol. 61(3), pages 629-656, May.
    4. Guesnerie, Roger & Seade, Jesus, 1982. "Nonlinear pricing in a finite economy," Journal of Public Economics, Elsevier, vol. 17(2), pages 157-179, March.
    5. Cremer, Helmuth & Pestieau, Pierre, 1996. "Distributive implications of European integration," European Economic Review, Elsevier, vol. 40(3-5), pages 747-757, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dhillon, Amrita & Perroni, Carlo & Scharf, Kimberley A., 1999. "Implementing tax coordination," Journal of Public Economics, Elsevier, vol. 72(2), pages 243-268, May.
    2. Bönke, Timm & Jochimsen, Beate & Schröder, Carsten, 2011. "Fiscal equalization and regions' (un)willingness-to-tax: Evidence from Germany," Economics Working Papers 2011-06, Christian-Albrechts-University of Kiel, Department of Economics.
    3. GRECO, Luciano, 2003. "Optimal grants under asymmetric information: federalism versus devolution," LIDAM Discussion Papers CORE 2003024, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Guy Gilbert & Yvon Rocaboy, 2004. "The central government grant allocation problem in the presence of misrepresentation and cheating," Economics of Governance, Springer, vol. 5(2), pages 137-147, July.
    5. Horst Raff & John Wilson, 1997. "Income Redistribution with Well-Informed Local Governments," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(4), pages 407-427, November.
    6. Bönke, Timm & Jochimsen, Beate & Schröder, Carsten, 2014. "Fiscal federalism and tax enforcement," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100394, Verein für Socialpolitik / German Economic Association.
    7. Cremer, Helmuth & Pestieau, Pierre, 2002. "Factor Mobility and Redistribution: A Survey," IDEI Working Papers 154, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003.
    8. Maria Racionero, 2000. "Optimal Redistribution with Unobservable Preferences for an Observable Merit Good," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 479-501, August.
    9. Breuille, Marie-Laure & Gary-Bobo, Robert J., 2007. "Sharing budgetary austerity under free mobility and asymmetric information: An optimal regulation approach to fiscal federalism," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1177-1196, June.
    10. Besfamille, Martin, 2004. "Local public works and intergovernmental transfers under asymmetric information," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 353-375, January.
    11. Bottazzi, Laura & Manasse, Paolo, 2005. "Asymmetric Information and Monetary Policy in Common Currency Areas," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(4), pages 603-621, August.
    12. Sánchez Torres, Fabio & España Eljaiek, Irina & Zenteno, Jannet, 2012. "Sub-national Revenue Mobilization in Latin American and Caribbean Countries: The Case of Colombia," IDB Publications (Working Papers) 4191, Inter-American Development Bank.
    13. Anton Bondarev & Beat Hintermann & Frank C. Krysiak & Ralph Winkler, 2017. "The Intricacy of Adapting to Climate Change: Flood Protection as a Local Public Goods Game," CESifo Working Paper Series 6382, CESifo.
    14. Timm Bönke & Beate Jochimsen & Carsten Schröder, 2017. "Fiscal Equalization and Tax Enforcement," German Economic Review, Verein für Socialpolitik, vol. 18(3), pages 377-409, August.
    15. Martin Besfamille & Jean-Marie Lozachmeur, 2010. "NIMBY and mechanism design under different constitutional constraints," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(2), pages 114-132, April.
    16. Sanguinetti, Pablo & Tommasi, Mariano, 2004. "Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline," Journal of International Economics, Elsevier, vol. 62(1), pages 149-170, January.
    17. Pestieau, Pierre, 1996. "Politique sociale, redistribution et intégration économique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 72(3), pages 275-289, septembre.
    18. Martin Besfamille, 2000. "Fiscal federalism, local public works and corruption," CREPP Working Papers 0001, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    19. Helmuth Cremer & Pierre Pestieau, 1997. "Income Redistribution in an Economic Union: The Trade Off Between Inter- and Intra-National Redistribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(3), pages 325-335, July.
    20. Timm Bönke & Beate Jochimsen & Carsten Schröder, 2013. "Fiscal Federalism and Tax Administration: Evidence from Germany," Discussion Papers of DIW Berlin 1307, DIW Berlin, German Institute for Economic Research.
    21. Sören Blomquist & Luca Micheletto, 2009. "Nonlinear Income Taxation And Matching Grants In A Federation With Decentralized In-Kind Transfers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 543-575, May.
    22. Krause, Günter, 2004. "The provision of public inputs in a federation under asymmetric information," W.E.P. - Würzburg Economic Papers 52, University of Würzburg, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Helmuth Cremer & Pierre Pestieau, 1997. "Income Redistribution in an Economic Union: The Trade Off Between Inter- and Intra-National Redistribution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 4(3), pages 325-335, July.
    2. Brito, Dagobert L. & Hamilton, Jonathan H. & Slutsky, Steven M. & Stiglitz, Joseph E., 1995. "Randomization in optimal income tax schedules," Journal of Public Economics, Elsevier, vol. 56(2), pages 189-223, February.
    3. Henrik Jordahl & Luca Micheletto, 2005. "Optimal Utilitarian Taxation and Horizontal Equity," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 7(4), pages 681-708, October.
    4. Kokovin, S. & Nahata, B. & Zhelobodko, E., 2011. "All Solution Graphs in Multidimensional Screening," Journal of the New Economic Association, New Economic Association, issue 11, pages 10-38.
    5. Bierbrauer, Felix & Brett, Craig & Weymark, John A., 2013. "Strategic nonlinear income tax competition with perfect labor mobility," Games and Economic Behavior, Elsevier, vol. 82(C), pages 292-311.
    6. Sören Blomquist & Luca Micheletto, 2009. "Nonlinear Income Taxation And Matching Grants In A Federation With Decentralized In-Kind Transfers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 543-575, May.
    7. Robin Boadway, 1998. "The Mirrlees Approach to the Theory of Economic Policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(1), pages 67-81, February.
    8. Kolmar, Martin, 2002. "Income redistribution in an economic union: Does asymmetric information legitimize centralization?," Discussion Papers, Series I 317, University of Konstanz, Department of Economics.
    9. Feld, Lars P, 2000. "Tax Competition and Income Redistribution: An Empirical Analysis for Switzerland," Public Choice, Springer, vol. 105(1-2), pages 125-164, October.
    10. Pestieau, Pierre, 1996. "Politique sociale, redistribution et intégration économique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 72(3), pages 275-289, septembre.
    11. Kimmo Berg, 2013. "Complexity of solution structures in nonlinear pricing," Annals of Operations Research, Springer, vol. 206(1), pages 23-37, July.
    12. Yukihiro Nishimura, 2008. "Envy Minimization In The Optimal Tax Context," Working Paper 1178, Economics Department, Queen's University.
    13. Andersson, Tommy, 2004. "Essays on Nonlinear Pricing and Welfare," MPRA Paper 59446, University Library of Munich, Germany.
    14. Kokovin Sergey & Zhelobodko Evgeniy, 2008. "Overall Inefficiency and Cycles in Non-ordered Screening under Capacity Constraints and Standardization," EERC Working Paper Series 08/03e, EERC Research Network, Russia and CIS.
    15. Stefan Homburg, 2001. "The Optimal Income Tax: Restatement and Extensions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(4), pages 363-395, November.
    16. da Costa, Carlos E. & Severo, Tiago, 2008. "Education, preferences for leisure and the optimal income tax schedule," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 113-138, February.
    17. Martin Kolmar, 2002. "An Analysis of Institutional Change in the European Union with an Application to Social Policy," Discussion Papers of DIW Berlin 282, DIW Berlin, German Institute for Economic Research.
    18. Kolmar, Martin, 1999. "Optimale Ansiedlung sozialpolitischer Entscheidungskompetenzen in der Europäischen Union," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 7, number urn:isbn:9783161471254, May.
    19. Craig Brett, 2007. "Optimal nonlinear taxes for families," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 225-261, June.
    20. Martin Kolmar, 2003. "An Analysis of Institutional Change in the European Union," European Journal of Law and Economics, Springer, vol. 16(3), pages 303-326, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cor:louvco:1994069. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alain GILLIS (email available below). General contact details of provider: https://edirc.repec.org/data/coreebe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.