Fiscal Federalism

Research Report

Fiscal Federalism

From The Encyclopedia of Taxation and Tax Policy
October 1, 1999


Fiscal federalism is the analysis of the problems that give rise to, and arise from, the existence of more than one level of government within the same geographical area. As originally developed by Musgrave (1959) and Oates (1972), the "theory of fiscal federalism" concerns the division of public-sector functions and finances in a logical way among multiple layers of government (King 1984). This article describes the theories of fiscal federalism and the history of the literature.

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