Joint care and joint funding

One of the most important possible sources of conflict of interest between central and local governments is difference in political preferences with respect to, for example, income redistribution. If local governments are of a different political composition than the central government, they may be inclined to reinforce or weaken the redistribution policies as pursued by the central government. We empirically test whether local governments in the Netherlands do pursue income redistribution policies over and above the central government's redistribution policy and we find that the distribution of the local tax burden over the various household types differs according to the political composition of the local council.