Arbeitspapier
The tax-rate elasticity of local business profits
Local business profits respond to local business tax (LBT) rates that vary across municipalities. We estimate that a one percent increase in the LBT rate decreases the LBT base by 0.45 percent, based on the universe of German LBT return files, which include corporations and unincorporated businesses. However, the fiscal equalization scheme largely compensates municipalities for the loss in the LBT base when they increase the LBT rate. Our estimates suggest that using tax revenue data instead of tax return data, as commonly done in the literature, results in a significant bias of the elasticity away from zero.
- Language
-
Englisch
- Bibliographic citation
-
Series: Diskussionsbeiträge ; No. 2014/28
- Classification
-
Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
State and Local Taxation, Subsidies, and Revenue
- Subject
-
local business tax
corporate tax
tax responsiveness
tax-rate elasticity
- Event
-
Geistige Schöpfung
- (who)
-
Fossen, Frank M.
Steiner, Viktor
- Event
-
Veröffentlichung
- (who)
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Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
- (where)
-
Berlin
- (when)
-
2014
- Handle
- Last update
- 10.03.2025, 11:46 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Fossen, Frank M.
- Steiner, Viktor
- Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
Time of origin
- 2014
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