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How Fiscal Decentralization Flattens Progressive Taxes Author info | Abstract | Publisher info | Download info | Related research | Statistics Roland Hodler
Kurt Schmidheiny
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We study the tension between fiscal decentralization and progressive taxation. We present a multi-community model in which households differ in incomes and housing preferences and in which the local income tax rate is a function of an exogenous progressive tax schedule and an endogenous local tax multiplier. The progression of the tax schedule induces a self-sorting process that results in substantial though imperfect income sorting. Considering this income sorting, the resulting tax schedule is less progressive than the exogenous tax schedule. Empirical evidence from the largest Swiss metropolitan area supports the predictions of our model.
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Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv .
Volume (Year): 62 (2006)
Issue (Month): 2 (June)
Pages: 281-304
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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200606)62:2_281:hfdfpt_2.0.tx_2-mContact details of provider: Web page: http://www.mohr.de/fa
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Keywords: Progressive Taxation ; Fiscal Decentralization ; Income Segregation ; Other versions of this item:
Find related papers by JEL classification: H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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