Work

Tax base fragmentation as a dimension of metropolitan inequality

Year: 2025

Type: article

Abstract: The United States devolves responsibility for providing critical services to local governments. With limited centralized transfers, the ability to provide these services is determined by the base of taxable wealth that is contained within contested municipal boundaries. We document how jurisdictional fragmentation and economic segregation interact to create tax base fragmentation, the unequal allocation of taxable property wealth across jurisdictional boundaries. The level of tax base fragmentation varies across the country, but is substantial in many large metros, and is associated with both the amount and type of revenue raised by local governments. We also identify hundreds of individual jurisdictions that disproportionately benefit from or are harmed by tax base fragmentation, showing how the institutional structure of US fiscal federalism allows some jurisdictions to function as tax shelters for wealthy residents and corporations, while conversely subjecting other jurisdictions to severe fiscal stress, even in broadly prosperous metropolitan areas.

Source: Socio-Economic Review

DOI: 10.1093/ser/mwaf055

Authors: Robert Manduca, Brian Highsmith, Jacob Waggoner

Institutions: University of Michigan, University of California, Los Angeles, Harvard University

Language: English

Topic: Local Government Finance and Decentralization

Subfield: Political Science and International Relations

Field: Social Sciences

Domain: Social Sciences

SDGs: Reduced inequalities, Peace, justice, and strong institutions, Sustainable cities and communities

Open Access status: hybrid

Estimated APC paid: $3,718