How (and how it should be) governments design fiscal policy in order to compete in a global economy while meeting domestic policy priorities, including the redistribution? In 2009, California Governor Arnold Schwarzenegger has repeatedly declared financial emergencies, and the California state budget deficit reached unprecedented heights. The governor and legislative leaders of the Commission for the twenty-first century economy to recommend tax reforms that would improve the state's financial health and competitiveness. But when the commission issued its recommendations, many of which were in accordance with national and international trends in the field of taxation, legislative leaders have been highly critical of and prospects for reform in gray. The case describes the political and economic contribution to the California persistent budget deficits and the reforms recommended by the commission. It summarizes recent developments in the area of taxation of U.S. states and OECD countries on empirical trends in tax theory. Finally, it addresses the issue of inter-jurisdictional tax competition, with both positive and normative perspective. "Hide
by Matthew C. Weinzierl, Jacob Kuipers Source: Harvard Business School 33 pages. Publication Date: April 27, 2010. Prod. #: 710038-PDF-ENG
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