Separation of Bases and the Fiscal Constitution

A central concern of constitutional law and theory is the question of tax assignment: In a multilevel system of government, who gets to tax what? One conventional answer invokes the “separation of bases,” according to which constitutions should assign each tax base exclusively to one level of government. Proponents justify separation on two grounds: It prevents excessive taxation (the efficiency rationale), and it protects states from federal encroachment (the federalism rationale). These arguments have a centuries-long lineage in Anglo-American political economy and continue to feature prominently in constitutional litigation today.