Robert Tannenwald

Massachusetts Business Taxes: Unfair? Inadequate? Uncompetitive?

In debating Massachusetts business tax policy, protagonists have cited many different indicators purporting to assess the fairness, adequacy, and competitiveness of the Commonwealths business taxes. These statistics actually reveal very little about the degree to which Massachusetts business taxes achieve these widely accepted tax policy goals. The author explains why these indicators are misleading and presents new indicators of business tax competitiveness that, although imperfect, are more accurate than those most widely quoted. The article concludes that the fairness of Massachusetts business taxes is unclear and that the Commonwealths corporate income taxes are inadequate. The clearest conclusion drawn is that Massachusetts business taxes do not harm its competitive standing.

Genesis of State–Local Creativity

In this broad and illuminating work, experts on public finance discuss innovations in state and local tax policy that have been implemented or considered over the course of the last three decades. The authors provide original work that analyzes whether state and local governments have ‘gone outside the box’ to deal with the strains of current public finances or have gotten along by adhering to the status quo. This book provides researchers, students and policy makers with evaluations and analyses by well-known scholars in the area of state and local public finance of actual practices and analysis of potential policy changes for the future.

Devolution in the United States: Theory and Practice

The paper by Tannenwald examines the recent debate on devolution of fiscal responsibilities from the U.S. federal government to the States. Over the last 70 years, the share of federal spending out of total government outlays doubled, reaching 61 per cent. This trend appears inconsistent with the important role that the Constitution assigns to States. Since the 1990s, a rebalancing of responsibilities has been widely discussed. A “devolution revolution” has been considered. Several economists have highlighted the efficiency benefits of devolution and suggested several policy changes, such as the reduction in federal aid to state and local government, the substitution of block grants for matching entitlements and greater flexibility for states in making use of federal grants. Tannenwald notes that the political support for devolution has not actually been very strong and that the federal government has mostly retained its dominant role. He illustrates this point by analysing the policies concerning health care for children, health care for low-income households (the Medicaid program), and federal assistance for primary and secondary education. He shows that matching requirements and constraints on the use of federal funds still have an important role.