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  • April 2010 (Revised January 2013)
  • Case
  • HBS Case Collection

California's Budget Crises, Tax Reform, and Domestic and International Tax Competition

By: Matthew C. Weinzierl and Jacob Kuipers
  • Format:Print
  • | Language:English
  • | Pages:33
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Abstract

How do (and how should) governments design fiscal policies to compete in a globalized economy while meeting internal policy priorities including redistribution? In 2009, Governor Arnold Schwarzenegger repeatedly declared fiscal emergencies as California's state budget deficit reached all-time highs. The Governor and legislative leaders established the Commission on the Twenty-first Century Economy to recommend tax reforms that would improve the state's fiscal health and competitiveness. But when the Commission issued its recommendations, many of which were consistent with domestic and international trends in taxation, legislative leaders were highly critical and the prospects for reform dimmed. The case describes the political and economic contributors to California's persistent fiscal deficits and the reforms recommended by the Commission. It summarizes recent trends in taxation by U.S. states and OECD nations, relating the empirical trends to tax theory. Finally, it engages the issue of inter-jurisdictional tax competition from both positive and normative perspectives.
Instructors may also obtain a Teaching Note, written by this case's author, that provides suggestions for using this case effectively in the classroom.

Keywords

Budgets and Budgeting; Economy; Globalization; Governing Rules, Regulations, and Reforms; Policy; Taxation; Competition; California

Citation

Weinzierl, Matthew C., and Jacob Kuipers. "California's Budget Crises, Tax Reform, and Domestic and International Tax Competition." Harvard Business School Case 710-038, April 2010. (Revised January 2013.)
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About The Author

Matthew C. Weinzierl

Business, Government and the International Economy
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Related Work

    • April 2010 (Revised January 2013)
    • Faculty Research

    California's Budget Crises, Tax Reform, and Domestic and International Tax Competition

    By: Matthew C. Weinzierl and Jacob Kuipers
Related Work
  • California's Budget Crises, Tax Reform, and Domestic and International Tax Competition By: Matthew C. Weinzierl and Jacob Kuipers
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