John H. Beck

Tax competition, uniform assessment, and the benefit principle

Abstract In previous discussions it has been argued that tax competition between local governments results in a tax burden on business that is less than the cost of public services for business and in suboptimal levels of public expenditures for residents. However, this conclusion has never been substantiated by a full theoretical treatment. Here a theoretical model of tax competition is developed between metropolitan areas, with labor perfectly immobile and two local public goods, one for residents and one for business. For “plausible” parameter values, numerical solutions of the optimality conditions are computed by means of a nonlinear programming algorithm.

Life Cycle Investing, Holding Periods, and Risk

This article examines the relative performance of bills, bonds, and stocks over various holding periods. Using a resampling technique that accounts for the cross–sectional correlation between security classes, the authors find that the risk of underperformance for a strategy of investing in higher risk classes of investments is minimal over long holding periods, while the rewards are substantial.

Tax abatement and tax rates in a system of overlapping revenue-maximizing governments

Abstract This paper treats tax abatement as a form of discriminatory taxation in a model of two overlapping revenue-maximizing governments, a ‘municipality’ and a ‘school district’. If the ‘municipality’ can abate all property taxes, the school districts maximum revenues may be increased or decreased, depending on the fraction, θ, of the property value that remains taxable on projects granted abatements. If each government abates only its own taxes, school district revenues will be greater, but the maximum municipal tax revenues will be reduced.

Budget-Maximizing Bureaucracy and the Effects of State Aid on School Expenditures

This article estimates expenditure equations for Michigan school districts using Kelejians (1971) procedure for dealing with the endogenous state aid variables. Alternative specifications of the expenditure equation are derived, based on (i) a median voter model and (ii) Niskanens (1971) budget-maximizing model. Theoretical considerations imply different specifications of the aid variables than have been used in previous empirical work. The estimated effect of grants-in-aid is a larger increase in expenditures than is consistent with model (i) but less than is consistent with model (ii).

Voting Cycles in Business Curriculum Reform, a Note

The theoretical potential for voting cycles is well known, but the empirical frequency of its occurrence is still a topic for research. This paper presents a case study of the occurrence of voting cycles in business school curriculum reform. Three separate decisions are analyzed: (1) addition of a service requirement, (2) additions to the business core, and (3) changes in the nature of majors/“concentrations.” A voting cycle was found in (2) but not (1) or (3). This result is consistent with theoretical analyses finding that cycles are more likely when there are more alternatives to be considered and when there is less similarity in individual preferences.

Professional associations and the free rider problem: The case of optometry

Political influence by a professional association, like the influence of any special interest group, is a collective good for the members of the profession. This paper investigates the variables affecting the ability of state optometric associations to overcome the free rider problem and induce optometrists to join the association. Although the empirical results show little evidence that organization costs are reduced by concentration in urban areas, the results do strongly support the hypothesis that there will be less free riding in smaller groups. The results also support the hypothesis that selective incentives enable latent groups to overcome the free rider problem. By providing continuing education at reduced fees to members of the association, optometric associations have increased the percentage of optometrists who are association members in those states with statutory continuing education requirements.

Taxation, License Fees, and New Car Registrations

The structure of taxes and license fees on motor vehicles varies widely across the states. In 1997, automobile owners in 12 states and the District of Columbia paid only a fixed license fee independent of the age or value of the vehicle. But statewide license fees in 15 states declined as the value of the car declined, and fees in 6 states declined as the age of the car increased. Furthermore, local personal property taxes based on value applied to automobiles in 17 states. Taxes and license fees based on age or value raise the user cost of newer automobiles compared to older cars. Therefore, people are expected to substitute older model cars for new cars. The authors test this hypothesis by estimating a regression with the ratio of new car registrations to total registered automobiles as the dependent variable, using cross-sectional data for 1997 car registrations. The empirical results confirm their hypothesis.

Is Cleveland Another New York

In this article, the circumstances of the Cleveland default and the New York City fiscal crisis are compared. Regression equations for budgetary variables are estimated on a sample of 44 large cities and used to predict the levels of the budgetary variables for Cleveland and New York. Although there is some evidence that New Yorks expenditures and revenues are both greater than would be predicted for a city with its characteristics, Clevelands expenditures and revenues were not significantly different from what would be predicted for a city with its characteristics.

Regional Differences in Chapter 13 Filings: Southern Legal Culture or Religion?

Chapter 7 is designed for debtors who do not have the ability to pay their existing debts and many times leads to a legal release of most debt. Chapter 13 is designed for debtors who have the ability to pay all or part of their debts in installments over a period of time. Bankruptcy research finds that the southern region of the USA has a significantly higher portion of Chapter 13 filings than the rest of the country, unexplainable by quantifiable demographic, legal, or economic differences. Our results suggest that religion is the driving force behind the abnormally high Chapter 13 filings in the southern USA.

The incidence of classified property taxes in a three-sector model with an imperfectly mobile population

Abstract This paper analyzes the incidence of a classified property tax, imposing different effective tax rates on residential, commercial, and industrial property, as compared to a uniform property tax, taxing capital and land in all sectors at the same rate. Our model includes three sectors, commercial, industrial and residential, and three factors of production, land, labor, and capital. Capital is assumed to be perfectly mobile, but we consider varying degrees of labor mobility, allowing the possibility that part of a classified property tax may be shifted to workers through lower wages.