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Tax competition and income sorting: Evidence from the Zurich metropolitan area

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  • Schaltegger, Christoph A.
  • Somogyi, Frank
  • Sturm, Jan-Egbert

Abstract

We provide empirical evidence on the influence of income taxes on the choice of residence of taxpayers at the local government level. The fact that Swiss communities can independently set tax multipliers, thereby shifting the progressive tax scheme that is fixed at the cantonal (state) level, enables us to study the effect of differences in income taxation on individuals' choice of location within an economically and culturally homogeneous region. Using panel IV regressions covering the years 1991-2003 and 171 communities in the Swiss canton of Zurich and spatial error regressions for the 171 communities in 2003, we find substantial evidence of sorting according to income.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 27 (2011)
Issue (Month): 3 (September)
Pages: 455-470

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Handle: RePEc:eee:poleco:v:27:y:2011:i:3:p:455-470

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Tax competition Fiscal federalism Income segregation Income tax;

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Cited by:
  1. Schnellenbach, Jan, 2012. "The economics of taxing net wealth: A survey of the issues," Freiburg Discussion Papers on Constitutional Economics 12/5, Walter Eucken Institut e.V..
  2. Mario Morger, 2013. "What Do Immigrants Value Most About Switzerland? Evidence of the Relative Importance of Income Taxes," CESifo Working Paper Series 4134, CESifo Group Munich.

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