We extend to a fiscal federalism setting the literature on redistributive in-kind transfers in the presence of nonlinear income taxation. Local governments have a cost advantage, motivating decentralization of the in-kind transfer. The cost structure varies across regions, and the central government cannot observe which region is which. We show that decentralized in-kind transfers can, in this setting, be an even more important instrument for relaxing self-selection constraints, thus, helping redistribution, than in single-government models. We characterize the optimal marginal tax rates and matching grants. The grants have a very different structure than the one derived in earlier studies.
|Titolo:||Nonlinear Income Taxation and Matching Grants in a Federation with Decentralized In-Kind Transfers|
MICHELETTO, LUCA (Ultimo)
|Settore Scientifico Disciplinare:||Settore SECS-P/03 - Scienza delle Finanze|
|Data di pubblicazione:||mag-2009|
|Digital Object Identifier (DOI):||10.1111/j.1468-2354.2009.00540.x|
|Appare nelle tipologie:||01 - Articolo su periodico|