Conventional economic wisdom holds that the optimal level of business taxes recovers the exact cost of providing public services to businesses. I present an alternative model and derive conditions under which a self-interested decisionmaker picks tax rates to maximize an objective function that...

Tax increment financing (TIF), a popular economic development tool across the United States, often falls short of its promise to revitalize struggling neighborhoods. TIF earmarks property tax revenue increases (or “increments”) in a designated area that are expected to result from new...

We analyze data about cigarette tax compliance from the first national scale littered cigarette packs collection. We code each pack based on whether an appropriate tax had been paid at the location where it was found. Noncompliance across our 132 sample communities ranges from zero to one...

NYC has the highest cigarette tax rate in the nation. Using tax stamp data from littered packs of cigarettes from a sample of randomly selected NYC census tracts, collected once before and three times after a tax increase, we find that tax evasion is high relative to the U.S., but that the...

Under reasonable assumptions about production technologies, international competition for factors of production will lead to convergence of per capita output. Is there an analogous process that leads to convergence of public sector activity? We provide a simple model that predicts convergence in...