Brian is studying the consequences of residential segregation for municipal budget pressures and the provision of local public goods in the United States. This project explores how the distribution of wealth across contested municipal boundaries has contributes to fiscal stress in excluded minority communities, which in turn may encourage those jurisdictions to shift the costs of communal goods onto vulnerable residents—including through criminal system fines and fees. Working with Jacob Waggoner and Robert Manduca, this initial project uses a dataset of geocoded residential property values to develop an index that empirically measures tax base fragmentation within the metropolitan areas in the United States. Brian will then consider the legal implications of this analysis—particularly with respect to state laws governing municipal incorporation, annexation, secession—and proposes policy reforms including a permanent program of federal revenue-sharing across municipalities.
Researcher: Brian Highsmith
The Effects of Macro-Segregation on Local Fiscal Capacity: Developing a Measure of Tax Base Fragmentation
Brian Highsmith, Jacob Waggoner, and Robert Manduca
The United States devolves to local governments considerable responsibility for the provision of public goods. In the absence of significant centralized fiscal transfers, local fiscal capacity is primarily determined by the base of taxable wealth that is contained within contested municipal boundaries. This institutional arrangement—which has long characterized the United States’ political economy but is unique among wealthy countries—increases the stakes of jurisdictional proliferation as well as economic sorting across geographic space. An emerging literature on “macro-segregation” has
found that patterns of racial and economic segregation increasingly is characterized by separation across independent municipalities within the same metropolitan area, rather than across neighborhoods within the same local jurisdiction. But although researchers have observed the resource hoarding dynamics that result from the interactions between residential segregation and jurisdictional fragmentation, to our knowledge none have attempted to quantify the degree to which economic macro-segregation directly affects local fiscal capacity across metropolitan areas of the United States. We introduce a new measure of tax base inequality—the Metropolitan Index of Tax Segmentation (“MITS”)—that captures the share of taxable property wealth that would need to shift across municipalities in a metropolitan area in order for each to have the same per capita tax base. Preliminary results using an administrative dataset of geocoded residential and commercial property tax assessments suggest that there is wide variation in tax base inequality across metropolitan areas in the United States, but confirm that it is severe in many large metro areas. We believe this work has the potential to uncover novel insights into the relationships between wealth inequality, residential segregation, and jurisdictional fragmentation.
Draft available upon request; please email bhighsmith@g.harvard.edu for more.
Keywords: segregation, inequality, taxation, boundaries, federalism