“Fiscal competition makes it difficult for governments to expand the welfare state to dangerous levels. In other words, it is a way of protecting governments from the worst impulses of their politicians.  I can’t resist sharing one additional bit of information from the Feld-Schnellenbach paper. They compare redistribution in several nations. As you can see in the table reproduced below, the United States and Switzerland benefit from having the lowest levels of overall redistribution.  It’s no coincidence that the U.S. and Switzerland are also the two nations with the most decentralization.”

http://danieljmitchell.wordpress.com/2012/09/04/study-from-german-economists-shows-that-tax-competition-and-fiscal-decentralization-limit-income-redistribution/

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