Fiscal Competition among Local Governments: The Issue of Municipal Overburden

This paper examines one set of hypotheses related to the interaction among local governments dependent upon a common property tax base. In measuring the fiscal capacity of one local government, the local revenue requirements of other governments are often taken into account. Thus, it is assumed that increased revenue demands by one local government significantly reduce the ability of other local governments to raise tax revenue. This is an empirically testable hypothesis.