Quotation Weichenrieder, Alfons and Lipatov, Vilen. 2016. A Decentralization Theorem of Taxation. CESifo Economic Studies 62 (2): S. 289-300.




In the European Union (EU), there are longstanding and ongoing pressures toward 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 spillover 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 result. While spillover effects of taxation may call for central rules for taxation, as long as spillover 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.


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Status of publication Published
Affiliation WU
Type of publication Journal article
Journal CESifo Economic Studies
Citation Index SSCI
WU-Journal-Rating new VW-D
Language English
Title A Decentralization Theorem of Taxation
Volume 62
Number 2
Year 2016
Page from 289
Page to 300
URL http://cesifo.oxfordjournals.org/content/62/2/289
DOI 10.1093/cesifo/ifw003
JEL H21 H77


Weichenrieder, Alfons (Details)
Lipatov, Vilen (Goethe University Frankfurt Faculty of Economics and Business Administration, Germany)
Research Institute for International Taxation FI (Details)
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