Abstract
Government centralization is not a law of nature. It can be explained on the one hand by the endeavor of locally elected representatives of national assemblies to form tax and expenditure cartels, on the other hand by the constitutional power of the federal government to take over state tax legislation and to act as a cartel enforcer. A case study provides empirical evidence and moreover shows that such cartels generate a higher tax level and perform badly in interregional equalization of per capita income. The relevance of constitutional power for explaining centralization seems to be confirmed in various countries.
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