On July 8, Professor Erin Scharff reported on the financing of American municipalities through a variety of small locally levied taxes.
Municipal budgets are repeatedly at the center of debates about the advantages and disadvantages of federal systems – not only in Germany. In the US, federalism also has financial implications for municipalities, but it also provides scope for adaptation to local conditions, including through flexible tax legislation.
As part of the lecture series of the Max Planck Hub Fiscal and Social State, Professor Erin Scharff provided insights into the detailed composition of municipal budgets in the US system of fiscal federalism.
Professor Scharff is Willard H. Pedrick Distinguished Research Scholar and Professor of Law at the Sandra Day O'Connor College of Law at Arizona State University. Her academic work focuses on fiscal federalism, in particular the legal authority of state and local governments to levy taxes in the US.
In her presentation, she highlighted the surprising and little-studied role of selective local taxes, which generate only modest revenues but nevertheless play an important role in the patchwork of US municipal finances.
Based on recent research, Professor Scharff explained how American local governments, in addition to more traditional broad-based taxes, rely on what she calls “niche taxes” to compensate for state-level constraints and administrative fragmentation fiscally. Scharff then discussed with participants the impact of these taxes on visibility, enforcement, and democratic accountability. “By highlighting the improvisational character of local taxation in the US, I hope to open space for comparative insights and cross-national dialogue,” Professor Scharff summarized her presentation.
August 2025