This topic contains a solution. Click here to go to the answer

Author Question: What are the benefits of intergovernmental competition? Do those benefits disappear if the mobility ... (Read 19 times)

ss2343

  • Hero Member
  • *****
  • Posts: 548
What are the benefits of intergovernmental competition? Do those benefits disappear if the mobility of individuals in the society is limited? Why or why not?
 
  What will be an ideal response?

Question 2

Explain the interaction between inflation and tax revenues. Did the indexing of tax brackets in 1982 eliminate all of the negative effects of inflation on taxes?
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

patma1981

  • Sr. Member
  • ****
  • Posts: 292
Answer to Question 1

Intergovernmental competition gives individuals a variety of governments to choose from. By moving from one government to another they can choose from among different bundles of local public goods. Intergovernmental competition also facilitates comparisons among local governments, giving citizens a way to compare the performance of their own governments by giving a benchmark of quality. The benefits associated with intergovernmental competition do not disappear if mobility is limited because individuals can still compare their own governments to nearby governments.

Answer to Question 2

Inflation interacts with tax revenues because if tax brackets are not indexed for inflation, then nominal increases in income due to inflation will lead to real tax increases as individuals are pushed into higher tax brackets. The indexing of tax brackets in 1982 eliminated most of the negative effects of inflation on taxes, but not all. That is because not all features of the tax code have been indexed for inflation, merely the tax brackets. For example, capital gains are based on nominal increases in the price of the asset sold, so inflation has the impact of increasing real taxes on capital gains without a vote by Congress.





 

Did you know?

The human body produces and destroys 15 million blood cells every second.

Did you know?

Patients who have undergone chemotherapy for the treatment of cancer often complain of a lack of mental focus; memory loss; and a general diminution in abilities such as multitasking, attention span, and general mental agility.

Did you know?

Complications of influenza include: bacterial pneumonia, ear and sinus infections, dehydration, and worsening of chronic conditions such as asthma, congestive heart failure, or diabetes.

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

The average human gut is home to perhaps 500 to 1,000 different species of bacteria.

For a complete list of videos, visit our video library