San José State University
College of Social Sciences / Department of Economics
Economics 232-01,  
 Seminar in Public Finance

Course No. 44941, Fall 2016, Aug. 29-Dec. 19


Fred Foldvary

Office Location:

Clarke 140-40


(510) (590-2469)


[email protected]

Office Hours:

Mondays 5:00-6:00 PM

Class Days/Time:

Mondays 6:30 - 9:15 PM


Engineering 303


Instructor consent.

Class Web Resources

The class will use the Canvas class system.

Links to course materials such as the syllabus, readings, and assignments are on the class web page at

Course Description

The public sector. Determination of objectives of the public sector; pricing and output in the public sector; taxes, their distribution and allocative effects; public expenditure theory; public debt theory and policy.

Public Finance involves government revenue (taxes and debt) and spending, and their effects.  Public finance is treated broadly to also analyze the revenues and spending for public goods by homeowner associations and other private-sector communities.

Course Learning Objectives

Upon successful completion of this course, students will be able to:

Understand the theory of public finance and the basic facts of U.S. public finance at a deep enough level to enable one to teach undergraduate public finance and explain public finance concepts to the public.


Course Content Learning Outcomes

Upon successful completion of this course, students will be able to:

Be able to conduct scholarly research in public finance.

Develop analytical skills and understanding in applying economics to public finance.

Develop scholarly writing and presentation skills.

Required Texts/Readings


John Anderson.  Public Finance, 2nd edition.  (New York: Cengage, 2012). 

(ISBN-13: 9780538478441).  It is available new and used at the bookstore.

The 1st edition may be used also, as it is much cheaper.

Other Readings

The other readings are linked on the class web site and are also indicated in the syllabus schedule below.


Classroom Protocol


1.      In class, turn off cell phones, pagers, and other noisy electronic devices. Laptop computers and audio recorders are okay so long as they are silent.

2.      For exams, plain calculators are permitted, but avoid using devices that can communicate with others.

3.   All problem sets and the research project have to be submitted on paper, not as email attachments.  This includes late submissions.  Please do not send me any attachments.

4.   Put "Econ 232" on the subject line when you send me an email message.


Please arrive on time.  We will conduct this class as a graduate seminar.  Rather than only listening to lectures, students should be prepared to discuss the assigned readings for each session.  There will be a break around the midpoint of the class time.


Dropping and Adding

Students are responsible for understanding the policies and procedures about add/drop, grade forgiveness, etc.  Refer to the current semester’s Catalog Policies section at  Add/drop deadlines can be found on the current academic calendar web page located at  The Late Drop Policy is available at Students should be aware of the current deadlines and penalties for dropping classes.


Information about the latest changes and news is available at the Advising Hub at

Assignments and Grading Policy


 Your grade in this course will be based on the following categories:

Written assignments


Research Project


Midterm exam


Final exam


Oral exam


 Corresponding letter grades will be assigned as follows:

















Assignments submitted one week late will have a grade deduction of 20 percent.  No credit is provided for any later submissions.  All written assignments must be turned in on paper; no email attachments. If you cannot be in class to turn in a written assignment, finish it early and arrange to have it delivered to me.

Research project.

The project will be due and graded in two stages as indicated in the schedule.

University Policies

Academic integrity

Your commitment as a student to learning is evidenced by your enrollment at San Jose State University.  The University’s Academic Integrity policy, located at, requires you to be honest in all your academic course work. Faculty members are required to report all infractions to the office of Student Conduct and Ethical Development.

The Student Conduct and Ethical Development website is available at

Instances of academic dishonesty will not be tolerated. Cheating on exams or plagiarism (presenting the work of another as your own, or the use of another person’s ideas without giving proper credit) will result in a failing grade and sanctions by the University. For this class, all assignments are to be completed by the individual student unless otherwise specified. If you would like to include your assignment or any material you have submitted, or plan to submit for another class, please note that SJSU’s Academic Policy S07-2 requires approval of instructors.

Campus Policy in Compliance with the American Disabilities Act

If you need course adaptations or accommodations because of a disability, or if you need to make special arrangements in case the building must be evacuated, please make an appointment with me as soon as possible, or see me during office hours. Presidential Directive 97-03 requires that students with disabilities requesting accommodations must register with the Disability Resource Center (DRC) at to establish a record of their disability.

Economics 232,   Seminar in Public Finance

Course No. 44941, Fall 2016

Students should come to class prepared for a discussion of every assigned reading that week.  The schedule is approximate, as sometimes a topic will be continued next week.  Changes will be announced by e-mail and in class.



Readings (see class web site for links)

1: (08-29)

The incidence of taxes.

2: (09-12)

Land-value taxation.

Economist magazine on property taxes.

Foldvary, Ultimate Tax Reform and Geo-Rent

Gaffney on Detroit.  Taxation in Estonia.

Terry Dwyer on measuring Australia's rent

Dye and England, Land Value Taxation

3: (09-19)

The governmental sector; methods.


Anderson: chapters 1 - 2

Project selection and description is due.

Econ Dept Provocative Lecture, David Friedman

4: (09-26)

Public Goods, Externalities.


 Anderson: chapters 3-4, Foldvary "Green Tax Shift" and "Lighthouse." Coase on the Lighthouse. Carbon taxes and trading.  Parry, carbon abatement. Cost of regulation.

(Econ Dept. Provocative Lecture 5:15 to 6:45 pm.)

5: (10-03)

Externalities cont.; Transfers; Public choice

Anderson: chapters 5-6. 

Demand Revelation. Cowen, rent seeking

6: (10-10)


7:  (10-17)

Cost-benefit, Production of  Public Goods.

Video lecture

Anderson: chapters 7 – 8


8: (10-24)

Social insurance; Tax structure

Anderson: chapters 9 – 10



9: (10-31)


Excess burdens, incentive effects


Anderson: chapters 11 - 12. Cowen, Poterba,

Mason Gaffney, "Gains from Untaxing ...", Heins on Harberger. Tideman, Avoidable excess burden.

Charles Stuart, “Welfare Costs."


10: (11-07)


Equity in public finance.

Personal income tax.

Anderson: chapters 13 - 14.  Jensen on 16th Amendment.

California's business exodus.





Corporate income tax.

Anderson: chapter 15


12: (11-21)

Sales taxes and VAT.

Property taxes.

Anderson: chapters 16 - 17.  Gaffney: sales tax history.

Holcombe and Gaffney on VAT.  Hotel tax.

Poterba on excise taxes.  IMF paper on property taxes.

First draft of term papers are due.


13: (11-28)

Budgets and debt.

Multilevel finances

Anderson: chapters 18 - 19



14: (12-05)

Local government.

Policy analysis.

Anderson: chapters 20 - 21.

HG theorem.   Free the World, economic freedom.

Final drafts of project papers are due.


15: (12-12)

Private communities.

Student presentations.

Foldvary, Public Goods and Private Communities.

  Chapters 3, 8, 10. 







Final exam:  Monday, December 19. 19:45 – 22:00 (7:45 - 10:00 pm)