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Regional Cost-of-Living Adjustments in Tax-Transfer Schemes

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  • Louis Kaplow

Abstract

The federal income tax and major welfare programs do not take into account significant cost-of-living variations among regions. This article considers what adjustments might be appropriate in light of the distributive purposes of tax and welfare systems and concerns about the efficiency of the interregional allocation of resources. Price index problems, differences in amenities, and heterogeneity of individuals' locational preferences are considered.

Suggested Citation

  • Louis Kaplow, 1995. "Regional Cost-of-Living Adjustments in Tax-Transfer Schemes," NBER Working Papers 5008, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5008
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    Cited by:

    1. Esteller-Moré, Alejandro & Rizzo, Leonzio, 2011. "(Uncontrolled) Aggregate Shocks or Vertical Tax Interdependence? Evidence From Gasoline and Cigarettes," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 353-379, June.
    2. Leah Beth Curran & Harold Wolman & Edward W. Hill & Kimberly Furdell, 2006. "Economic Wellbeing and Where We Live: Accounting for Geographical Cost-of-living Differences in the US," Urban Studies, Urban Studies Journal Limited, vol. 43(13), pages 2443-2466, December.
    3. Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
    4. Jan Eeckhout & Nezih Guner, 2014. "Optimal Spatial Taxation: Are Big Cities too Small?," Working Papers 804, Barcelona School of Economics.
    5. Glaeser, E. L., 1998. "Should transfer payments be indexed to local price levels?," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 1-20, January.
    6. Wouter Vermeulen & Jos Van Ommeren, 2009. "Compensation of Regional Unemployment in Housing Markets," Economica, London School of Economics and Political Science, vol. 76(301), pages 71-88, February.
    7. Johannes Fleck & Chima Simpson-Bell, 2019. "Public Insurance in Heterogeneous Fiscal Federations: Evidence from American Households," 2019 Meeting Papers 296, Society for Economic Dynamics.
    8. Jan Eeckhout & Nezih Guner, 2017. "Optimal Spatial Taxation: Are Big Cities too Small?," Working Papers wp2018_1705, CEMFI.
    9. Nezih Guner & Jan Eeckhout, 2014. "Optimal Spatial Taxation," 2014 Meeting Papers 750, Society for Economic Dynamics.

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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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