How Federal Aid Hikes State and Local Taxes


 

Publication Date: October 1982

Publisher: Heritage Foundation (Washington, D.C.)

Author(s): Richard 8. McKenzie

Research Area: Banking and finance; Government

Keywords: Taxes

Type: Report

Abstract:

The purpose of this paper is limited t o sorting out the theoretical and working relationship between federal aid and the tax levels of subordinate governments. More specifically , the analysis provides the basis for predicting the effects of both reducing the funding level of fiscal federalism and shifting from categorical t o block grants. Additional research will involve empirical tests of the predictions developed here.