We don’t hurt federalism and the CP doesn’t solve it.

B. Which Level of Government Should Redistribute Wealth? Working from the core insights of the Tiebout hypothesis, public finance economists have traditionally asserted that all redistributive policies should be concentrated at the most centralized level of government.7 The reasons behind this central canon of fiscal federalism are straightforward. One concern is that redistribution undertaken by state and local governments creates pecuniary incentives for strategic migration. Where state and local governments redistribute wealth, there is a fear that both the rich and the poor will relocate to escape or take advantage of redistribution. From an efficiency perspective, the costs incurred in these movements represent a deadweight loss. 2 Another concern is that relying on subnational governments to redistribute wealth will result in too little redistribution. In effect, redistributive policies undertaken by state or local governments are likely to create spillover benefits for other jurisdictions, causing the redistributing jurisdiction, which is unable to internalize all of the policy's benefits, to provide too little redistribution. 3 These problems may be avoided by centralizing redistributive policies at the highest level of government. This federal assumption of redistributive policies, centralists argue, would not only avoid the pitfalls described above but would also help to foster a more efficient provision of local public goods.