Do fiscal transfers alleviate business tax competition?: evidence from Germany

Arbeitspapier

The paper empirically analyzes the incentive effects of equalizing transfers on business tax policy by exploiting a natural experiment in the state of Lower Saxony which changed its equalization formula as of 1999. We resort to within-state and across-state difference-indifference estimates to identify the reform effect on municipalities' business tax rates. Confirming the theoretical prediction, the reform had a significant impact on the municipalities' tax policy in the four years after the reform with a phasing out of the effect starting in the fourth to fifth year. The finding is robust to various alternative specifications.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1955

Classification and Topics

• Classification: Wirtschaft ; State and Local Taxation, Subsidies, and Revenue ; Business Taxes and Subsidies including sales and value-added (VAT)
• Subject: Kommunaler Finanzausgleich ; Gewerbesteuer ; Steuerwettbewerb ; Gemeindefinanzen ; Schätzung ; Niedersachsen ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Egger, Peter ; Koethenbuerger, Marko ; Smart, Michael
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/26000
• Last update: 10.03.2025, 11:44 AM CET