Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/110413 
Year of Publication: 
2015
Series/Report no.: 
SAFE Working Paper No. 105
Publisher: 
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe, Frankfurt a. M.
Abstract: 
In the EU there are longstanding and ongoing pressures towards a tax that is levied on the EU level to substitute for national contributions. We discuss conditions under which such a transition can make sense, starting from what we call a "decentralization theorem of taxation" that is analogous to Oates (1972) famous result that in the absence of spill-over effects and economies of scale decentralized public good provision weakly dominates central provision. We then drop assumptions that turn out to be unnecessary for this results. While spill-over effects of taxation may call for central rules for taxation, as long as spill-over effects do not depend on the intra-regional distribution of the tax burden, decentralized taxation plus tax coordination is found superior to a union-wide tax.
Subjects: 
fiscal federalism
taxing rights
decentralization theorem
JEL: 
H21
H77
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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