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Strategic Tax Competition in Switzerland: Evidence from a Panel of the Swiss Cantons

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  • Lars P. Feld
  • Emmanuelle Reulier

Abstract

Tax competition is discussed as a source of inefficiency in international taxation and in fiscal federalism. Two preconditions for the existence of such effects of tax competition are that mobile factors locate or reside in jurisdictions with -ceteris paribus- lower tax rates, and that taxes are actually set strategically in order to attract mobile production factors. It is well known from studies about Swiss cantonal and local income tax competition that Swiss taxpayers reside where income taxes are low. In this paper, empirical results on strategic tax setting by cantonal governments are presented for a panel of the Swiss cantons from 1984 to 1999. Completing the evidence on Swiss tax competition, income tax rates in cantons are the lower, the lower the tax rates of their neighbors. Copyright 2008 The Authors. Journal Compilation Verein für Socialpolitik and Blackwell Publishing Ltd. 2008.

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Bibliographic Info

Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 10 (2009)
Issue (Month): (02)
Pages: 91-114

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Handle: RePEc:bla:germec:v:10:y:2009:i::p:91-114

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Citations

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Cited by:
  1. Feld Lars P. & Baskaran Thushyanthan, 2010. "Federalism, Budget Deficits and Public Debt: On the Reform of Germany's Fiscal Constitution," Review of Law & Economics, De Gruyter, vol. 6(3), pages 365-393, December.
  2. Lars P. Feld & Christoph A. Schaltegger, 2012. "Die Politische Ökonomik der Besteuerung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13(1-2), pages 116-136, 02.
  3. Marcel Gérard & Hubert Jayet & Sonia Paty, 2009. "Tax Interactions among Belgian Municipalities: Does Language Matter?," CESifo Working Paper Series 2558, CESifo Group Munich.
  4. Ilaria Petrarca & Fabio Padovano, 2011. "From Taxes to Politics, from Politics to Taxes: Evidence of Yardstick Competition in the Italian Municipalities," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2011-01-ccr, Condorcet Center for political Economy.
  5. Gérard, Marcel & Jayet, Hubert & Paty, Sonia, 2010. "Tax interactions among Belgian municipalities: Do interregional differences matter?," Regional Science and Urban Economics, Elsevier, vol. 40(5), pages 336-342, September.
  6. Jan Schnellenbach, 2007. "Rational ignorance is not bliss: When do lazy voters learn from decentralised policy experiments?," Working Papers 0441, University of Heidelberg, Department of Economics, revised May 2007.
  7. Cassette, Aurélie & Di Porto, Edoardo & Foremny, Dirk, 2012. "Strategic fiscal interaction across borders: Evidence from French and German local governments along the Rhine Valley," Journal of Urban Economics, Elsevier, vol. 72(1), pages 17-30.
  8. Denvil Duncan & Ed Gerrish, 2014. "Personal income tax mimicry: evidence from international panel data," International Tax and Public Finance, Springer, vol. 21(1), pages 119-152, February.
  9. Ruiz, Fernando & Gerard, Marcel, 2008. "Is there evidence of strategic corporate tax interaction among EU countries?," MPRA Paper 10094, University Library of Munich, Germany.
  10. Baskaran, Thushyanthan & Lopes da Fonseca, Mariana, 2013. "The economics and empirics of tax competition: A survey," Center for European, Governance and Economic Development Research Discussion Papers 163, University of Goettingen, Department of Economics.
  11. Baskaran, Thushyanthan, 2013. "Identifying local tax mimicking: Administrative borders and a policy reform," Center for European, Governance and Economic Development Research Discussion Papers 157, University of Goettingen, Department of Economics.

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