Are Local Tax Rates Strategic Complements or Substitutes?

Konferenzbeitrag

The identification of strategic interactions among local governments is typically plagued by endogeneity problems. This paper proposes a quasi-experimental strategy to identify independent personal income tax setting by Swiss municipalities making use of the multi-tier federal system. State (cantonal) borders spatially bound the effects of canton-level fiscal reforms in areas that are otherwise highly integrated. Fiscal reforms at the canton level provide an exogenous source of variation in municipal tax rates, and are thus a valid instrument to identify strategic interactions among municipalities located at a cantonal border. In contrast to most of the existing empirical literature, I find that tax reaction functions have a negative slope and that taxes rates are strategic substitutes rather than strategic complements. This is compatible with a model of local tax setting in which governments primarily target expenditure rather than tax receipts.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: 52nd Congress of the European Regional Science Association: "Regions in Motion - Breaking the Path", 21-25 August 2012, Bratislava, Slovakia

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; State and Local Taxation, Subsidies, and Revenue ; Intergovernmental Relations; Federalism; Secession
• Thema: tax competition ; fiscal federalism

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Parchet, Raphael
• Ereignis: Veröffentlichung
• (wer): European Regional Science Association (ERSA)
• (wo): Louvain-la-Neuve
• (wann): 2012

Weitere Informationen

• Handle: http://hdl.handle.net/10419/120556
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ