Local Finance and Community Development

Abstract
This paper analyzes certain implications of the system of local finance for local and regional planning and spatial development in the United States and Western Germany. To strengthen the local tax base, local governments often follow development policies that are contrary to the aims and ends of regional planning and incompatible with over-all regional and national interests. Financially motivated self-interest also prejudices co-operation in local planning and local administration. In both countries there are significant differentials in local tax capacity that are unrelated to fiscal needs and are only partially equalized through intergovernmental grants. Planning could be made more effective by a revision of the present system of local finance.

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