Bài giảng tài chính công phân cấp tài khoá

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Bài giảng tài chính công phân cấp tài khoá

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Chapter State and Local Government Expenditures Public Finance and Public Policy Introduction  Optimal fiscal federalism is the question of which activities should take place at which level of government  For example, welfare programs were historically financed at the federal and state level, while education is largely financed at the state and local level FISCAL FEDERALISM IN THE U.S AND ABROAD  Early in the history of the United States, the federal government played a relatively limited role  The last amendment of the Bill of Rights of the United States Constitution states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”  Figure shows the spending patterns over time Figure Federal State In 1902, and government the local federal governments was government responsible The were role The ofshare the federal of state government financing coming responsible accounted for national fordefense, only education, 34%foreign of grew police, totalwith fromthe theintroduction federal government of the has relations, roads, government sanitation, judicialspending; functions, welfare, federal local health, and grown income the because tax and of thejoint Newprogram Deal like governments hospitals, postal accounted service and so on programs for 58% of cash the welfare Great Depression and Medicaid FISCAL FEDERALISM IN THE U.S AND ABROAD  The largest element of state and local spending is education, followed by health care and public safety  For federal spending, the largest elements are health care, Social Security, and national defense Spending and Revenue of State and Local Governments  The major source of revenue at the state and local level is the property tax, the tax on land and any building on it  Property taxes raised $253 billion in revenue in 2001, and accounted for almost one-half of the non-grant revenues of local governments Fiscal Federalism Abroad  The U.S sub-national governments collect a much larger share of total government revenue than in other countries, and spend a somewhat larger share of total government spending  Table shows this Table Subnational government spending/revenue as a share of total government spending/revenue Spending % Greece Portugal Revenue % 5.0 3.7 12.8 8.3 France 18.6 On the spending Theside, average the state/local government collectsless 22% of total 38.8 government Norway differences are slightly dramatic revenue, while those40.0 in the U.S United States collect 40% Denmark 57.8 OECD Average 32.2 13.1 20.3 40.4 34.6 21.9 Fiscal Federalism Abroad  The higher level of centralization in other nations exists because state/local governments have almost no legal power to tax citizens  Many countries practice fiscal equalization, whereby the national government distributes grants to sub-national government in an effort to equalize differences in wealth Fiscal Federalism Abroad  There has been a move toward decentralization around the world  In the U.S., there have been increased efforts to shift control and financing of public programs to the states, such as with welfare reform in 1996 l a c i r i The flypaper effect n p e Em vid E ce As shown in Figure 2, block grants are simply income increases to communities if they are either unconditional or conditional but below the city’s desired spending on the public good  The city should therefore reduce its own spending, a type of crowding out, so that spending on the public good goes up by only a fraction of the total grant amount l a c i r i The flypaper effect n p e Em vid E ce Researchers have compared the spending of states that receive larger and smaller grants from the federal government, to assess whether they largely crowd out state spending, as the theory predicts  Surprisingly, after reviewing the evidence Hines and Thaler (1995) found that crowd out is often close to zero, so total spending rises almost one-for-one l a c i r i The flypaper effect n p e Em vid E ce This finding has been described as the flypaper effect, because “money sticks where it hits.”  These older empirical studies suffer from potential bias, however States that value public goods the most may be the most successful at lobbying for federal grants  Thus, the positive correlation is not because of the flypaper effect, but rather spending preferences differ l a c i r i The flypaper effect n p e Em vid E e c A number of recent studies, that use more convincing quasi-experimental approaches find evidence that is inconsistent with the flypaper effect  These studies suggest that the traditional conclusion of substantial crowd-out from block grants is supported by the evidence Redistribution in Action: School Finance Equalization  School finance equalization laws mandate redistribution across communities in a state to ensure more equal financing of schools  Local districts receive about 45% of the funding from local sources, primarily from local property taxes This dependence can lead to vast disparities due to the wide variation in property values across towns  In Texas, for example, per-pupil spending varies by more than a factor of four from the lowest to highest district Redistribution in Action: School Finance Equalization  Since 1970, every state has made at least one attempt at school finance equalization, some prompted by state courts, others by the voting public Redistribution in Action: School Finance Equalization  The structure of these equalizations have taken very different forms, some very extreme  California, for example, imposes a 100% tax rate on localities that raise per-pupil spending more than $200 above the lowest district  On the other hand, New Jersey gives matching grants to localities with property values below the 85th percentile Redistribution in Action: School Finance Equalization  Empirical work suggests that equalization laws have had the intended effect of: Equalizing spending across districts  Equalizing student outcomes like SAT scores  Redistribution in Action: School Finance Equalization  However, equalization schemes have also had perverse effects  Hoxby (2001) computed the tax price of school equalization, the total amount of revenue a local district would have to raise in order to get another $1 of spending In California, the tax price is infinite  In New Jersey, the tax price is closer to $0.6, because of the matching grants  Redistribution in Action: School Finance Equalization  Hoxby found that extreme equalization schemes with very high tax prices lead to an overall reduction in per-pupil spending  California’s extreme equalization caused a 15% reduction in per-pupil spending  Oklahoma, Utah, and Arizona’s per-pupil spending fell by more than 10%  The equalization came at a cost–a “leveling down” of spending, leading to a deterioration in the quality of public schools and a flight toward private schools Redistribution in Action: School Finance Equalization  Hoxby also found that equalization schemes with low tax prices raised performance; states like New Jersey, New York, and Pennsylvania were able to “level up” the playing field  The lesson is therefore that school finance equalization can improve outcomes in lowwealth districts, but only if they not excessively penalize higher-wealth districts School finance equalization and i t a c li property tax limitations in p Ap n o California  Another interesting consequence of extreme school finance equalizations is examined by Fischel (1989)  He asked why California residents passed Proposition 13, limiting property taxes, in 1978 rather than in earlier referenda in 1968 and 1972? School finance equalization and i t a c li property tax limitations in p Ap n o California  The answer may lie in California’s 1974 school finance equalization court case, known as Serrano vs Priest  This is the case that broke the Tiebout mechanism in California by severing the linkage between taxes paid and benefits received School finance equalization and i t a c li property tax limitations in p Ap n o California  Wealthy voters in California would have opposed Proposition 13 in the absence of school finance equalization, because their high taxes were paying for schooling they desired for their town without subsidizing anyone else’s school  School finance equalization in California changed this, so the wealthy taxpayers were happy to approve Proposition 13 Recap of State and Local Government Expenditures  Fiscal Federalism in the U.S and Abroad  Optimal Fiscal Federalism  Redistribution Across Communities

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Mục lục

  • Chapter 6 State and Local Government Expenditures

  • Introduction

  • FISCAL FEDERALISM IN THE U.S. AND ABROAD

  • Slide 4

  • Slide 5

  • Spending and Revenue of State and Local Governments

  • Fiscal Federalism Abroad

  • Slide 8

  • Slide 9

  • Slide 10

  • OPTIMAL FISCAL FEDERALISM

  • Slide 12

  • The Tiebout Model

  • Slide 14

  • Slide 15

  • Slide 16

  • Problems with the Tiebout Model

  • Slide 18

  • Slide 19

  • Slide 20

  • Slide 21

  • Evidence on the Tiebout Model

  • Slide 23

  • Slide 24

  • Slide 25

  • Evidence for capitalization from California’s Proposition 13

  • Slide 27

  • Slide 28

  • Optimal Fiscal Federalism

  • Slide 30

  • Slide 31

  • Slide 32

  • Slide 33

  • REDISTRIBUTION ACROSS COMMUNITIES

  • Should We Care?

  • Slide 36

  • Tools of Redistribution: Grants

  • Slide 38

  • Slide 39

  • The flypaper effect

  • Slide 41

  • Slide 42

  • Slide 43

  • Redistribution in Action: School Finance Equalization

  • Slide 45

  • Slide 46

  • Slide 47

  • Slide 48

  • Slide 49

  • Slide 50

  • School finance equalization and property tax limitations in California

  • Slide 52

  • Slide 53

  • Recap of State and Local Government Expenditures

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