Because nonresidents benefit from local government public-safety services, suppose that the feder...
Because nonresidents benefit from local government public-safety services, suppose that the federal government offers localities a matching, open-ended categorical grant equal to $1 for $1 of local tax money spent on public safety.
a. What is the effect of this grant on the price of spending for public safety to these localities? How might the grant correct for the spillover problem?
b. Suppose the Central City currently levies a property tax for public safety at a rate of $10 per $1,000 of taxable value on a base of $10 million of taxable property. If the price elasticity of demand for public safety in Central City is 0.2, calculate and explain the expected effect of the grant on public-safety spending, public-safety taxes, and tax rates in Central City. (Show your work.)
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Because nonresidents benefit from local government public-safety services, suppose that the feder...
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17. The greater the variation in what consumers wants from government, and the more consumers with similar wants are grouped together, the stronger the case for decentralized provision of government services 18. The provision of public goods is limited to the government sector. 19. In examining a state's budget, and how resources are spent, you will get an accurate assessment by policy priorities by looking at only the expenditure side of the equation. 20 Under the current property...
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