CHAP10-State-and-Local-Government-Expenditures-公共金.ppt

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1、Prepared by:FERNANDO QUIJANO,YVONN QUIJANO,KYLE THIEL&APARNA SUBRAMANIAN10State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberPublic Finance and Public Policy,2/eJonathan GruberChapter 10 State and Local Government Expenditures 2007 Worth

2、 Publishers Public Finance and Public Policy,2/e,Jonathan GruberState and Local Government Expenditures10.3 Redistribution AcrossCommunities10.2 Optimal Fiscal Federalism10.1 Fiscal Federalism in theUnited States and AbroadChapter 1010.4 Conclusionoptimal fiscal federalism Thequestion of which activ

3、ities should take place at which level of government.2Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberFiscal Federalism in the United States and Abroad10.1intergovernmental grants Payments from one level of government to an

4、other.3Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberFiscal Federalism in the United States and Abroad10.1Spending and Revenue of State and Local Governmentsproperty tax The tax on land and any buildings on it,such as com

5、mercial businesses or residential homes.4Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberChapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberFiscal Fe

6、deralism in the United States and Abroad10.1Fiscal Federalism Abroadfiscal equalization Policies by which the national government distributes grants to subnational governments in an effort to equalize differences in wealth.6Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Pub

7、lic Finance and Public Policy,2/e,Jonathan GruberOptimal Fiscal Federalism10.2The Tiebout ModelWhat is it about the private market that guarantees optimal provision of private goods that is missing in the case of public goods?Tiebouts insight was that the factors missing from the market for public g

8、oods were shopping and competition.The situation is different when public goods are provided at the local level by cities and towns.Competition will naturally arise because individuals can vote with their feet:if they dont like the level of public goods provision in one town,they can move to the nex

9、t town.This threat of exit can induce efficiency in local public goods production.7Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberOptimal Fiscal Federalism10.2The Tiebout ModelThe main message of the model is that competit

10、ion across local jurisdictions places competitive pressures on the provision of local public goods.The Formal Model8Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberChapter 10 State and Local Government Expenditures 2007 Wor

11、th Publishers Public Finance and Public Policy,2/e,Jonathan GruberOptimal Fiscal Federalism10.2Problems with the Tiebout ModelThe Tiebout model requires equal financing of the public good among all residents.Problems with Tiebout Financinglump-sum tax A fixed taxationamount independent of a personsi

12、ncome,consumption of goods and services,or wealth.10Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberOptimal Fiscal Federalism10.2Problems with the Tiebout ModelTowns typically finance their public goods instead through a pr

13、operty tax.The problem that property taxation causes is that the poor chase the rich.Problems with Tiebout Financingzoning Restrictions that townsplace on the use of real estate.Zoning regulations protect the tax base of wealthy towns by pricing lower-income people out of the housing market.11Chapte

14、r 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberChapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberOptimal Fiscal Federalism10.2Evidence on the Tiebout Mod

15、elA testable implication of the Tiebout model is that when people have more choice of local community,the tastes for public goods will be more similar among town residents than when people do not have many choices.Resident Similarity Across Areas13Chapter 10 State and Local Government Expenditures 2

16、007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberChapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberEVIDENCE FOR CAPITALIZATION FROM CALIFORNIAS PROPOSITION 13Californias Proposition 13 became law in 19

17、78.Proposition 13 mandated that the maximum amount of any tax on property could not exceed 1%of the“full cash value”of the property.The full cash value was defined as the value as of 1976,with annual increases of 2%at most.Each$1 of property tax reduction increased house values by about$7.Full capit

18、alization of lower property taxes into house prices would imply that house prices should rise by the present discounted value of reduced future tax payments.In principle,the fall in property taxes would result in a future reduction in public goods and services,which would lower home values.The fact

19、that house prices rose by almost the present discounted value of the taxes suggests that Californians did not think that they would lose many valuable public goods and services when taxes fell.E M P I R I C A L E V I D E N C E15Chapter 10 State and Local Government Expenditures 2007 Worth Publishers

20、 Public Finance and Public Policy,2/e,Jonathan GruberOptimal Fiscal Federalism10.2Optimal Fiscal Federalismtax-benefit linkages The relationshipbetween the taxes people pay and the government goods and services they get in return.16Chapter 10 State and Local Government Expenditures 2007 Worth Publis

21、hers Public Finance and Public Policy,2/e,Jonathan GruberChapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberRedistribution Across Communities10.3Tools of Redistribution:Grants18Chapter 10 State and Local Government Expenditure

22、s 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberRedistribution Across Communities10.3Tools of Redistribution:GrantsMatching Grantsmatching grant A grant,the amount of which is tied to the amount of spending by the local community.19Chapter 10 State and Local Government Ex

23、penditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberRedistribution Across Communities10.3Tools of Redistribution:GrantsMatching Grants20Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberRedist

24、ribution Across Communities10.3Tools of Redistribution:GrantsBlock Grantblock grant A grant of some fixed amount with no mandate on how it is to be spent.21Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberRedistribution Acro

25、ss Communities10.3Tools of Redistribution:GrantsBlock Grant22Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberChapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jona

26、than GruberRedistribution Across Communities10.3Tools of Redistribution:GrantsConditional Block Grant24Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberRedistribution Across Communities10.3Redistribution in Action:School Fin

27、ance Equalizationschool finance equalization Laws that mandate redistribution of funds across communities in a state to ensure more equal financing of schools.25Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberTHE FLYPAPER E

28、FFECTHines and Thaler found that the crowd-out of state spending by federal spending is low and often close to zero.Economist Arthur Okun described this as the flypaper effect because“the money sticks where it hits”instead of replacing state spending.As Knight noted,states that get grants are the on

29、es that like spending the most.He also noted that highway grants from the federal government to states are determined by the strength of the states political representatives.Knight compared the level of spending in treatment states that see increases in the power of their congressional delegations w

30、ith the level of spending in control states that see decreases in the power of their congressional delegations.He found that each additional$1 of federal grant money increase due to rising congressional power leads to a$0.90 reduction in the states own spending.Additional studies also find evidence

31、inconsistent with the flypaper effect,suggesting that the traditional conclusion of substantial crowd-out from block grants is supported by the evidence.E M P I R I C A L E V I D E N C E26Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jo

32、nathan GruberChapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberSchool Finance Equalization and Property Tax Limitations in CaliforniaA P P L I C A T I O NIf residents perceived that property taxes were“too high”in California,

33、why did they wait until 1978 to lower them?Proposition 13 was actually a response to a court case that led to school finance equalization in California.The key feature of this decision was that it broke the link between local property taxes and spending on schools.Taxes were no longer a price:they w

34、ere just taxes.As a result,it was natural for communities to vote to lower taxes,since they did not perceive any benefit from them anymore.Wealthy voters would have opposed Proposition 13 in the absence of the school finance equalization because their high taxes were paying for schooling they desire

35、d for their town without subsidizing anyone elses schooling.Thus,these wealthy taxpayers were happy to approve Proposition 13.28Chapter 10 State and Local Government Expenditures 2007 Worth Publishers Public Finance and Public Policy,2/e,Jonathan GruberConclusion10.4In every country,the central gove

36、rnment collects only part of the total national tax revenues and does only part of the national public spending.When spending is on goods for which local preferences are relatively similar,and where most residents can benefit from those goods,the Tiebout model suggests that the spending should be do

37、ne locally.When spending is for goods that benefit only a minority of the population,the Tiebout model suggests that it might be difficult to do this spending locally because the majority of people who do not benefit will“vote with their feet”and move elsewhere.Higher levels of government may not believe the conclusions of the idealized Tiebout model,in which case they will want to redistribute across lower levels of government.If the higher-level government decides that it wants to redistribute across lower levels,it can do so through several different types of grants.29