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State and local government finance: Massachusetts - Essay Example

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Instructor: State and Local Government Finance: Massachusetts Introduction This paper seeks to highlight on issues of state and local government finance in relation to the state of Massachusetts. The state and local government finance encompasses the sale and delivery of debts generated by the state of Massachusetts (Fisher, 201)…
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State and local government finance: Massachusetts
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The economy of Massachusetts is driven by the agricultural and the industrial sector. The major elements of the agricultural sector include nursery, vegetables, seafood, cranberries and dairy products. The various industries established in the state include tourism, scientific instruments, printing and publishing, electric and electronic equipment and machinery. Median Voter Theorem In relation to Massachusetts’s state and local government finance, Median Voter Theorem allows for representation of policy preferences as a point along a single dimension.

Voters have a tendency to prefer a political candidate who has similar ideas to their preferred policies (Fisher, 133). This theory is based on the assumption that people vote directly on budgetary issue. It is expected that under such circumstances, the median preference will carry the day as much as it is not the majority preference. Political competition is known to be very vigorous, in most cases at the expense of innovation. The state of Massachusetts has witnessed several developments by politicians with an objective of luring voters (Fisher, 159).

Typical examples of these policies include social security, a proposal to freeze the federal government’s unrestricted spending and healthcare reforms. . In general, this theory reveals that politicians can greatly influence the financial position of a state or local government. Recently the Supreme Court made a ruling on campaign spending to allow corporations to fund political parties. The implication of such a ruling is that part of revenue generated by Massachusetts will be diverted to political parties as much as it is impossible to statistically establish whether or not money has any influence on election results.

This could easily result into misplaced priorities. Tiebout Hypothesis Fisher (211) reveals that a Tiebout hypothesis is one of the two models responsible for provision of services within the state and local government. In this case it is in relation to Massachusetts. This hypothesis is based on the assumption that consumer mobilization relies on the satisfaction of their preferences. In this case, consumers are well aware of services and taxes that are imposed to them by the decentralized government.

It is understood that each consumer pays an equal tax share. The various communities in Massachusetts are not restricted on mobility. It is also important to note that this hypothesis applies to homogenous communities that strive to reduce average costs. However, there are no spillovers between the communities. Locally, the taxes imposed on individuals are mainly on the properties which they purchase. A common trend in Massachusetts has been that high spending communities are continuously moving into low cost houses and homes alike.

The Tiebout model is based on the fact that different people in Massachusetts have varying tastes and preferences. It follows that they will make purchases within the state in relation to consistency with their tastes

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