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The Unequal Geographic Burden of Federal Taxation

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Author Info
David Albouy

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Abstract

In the United States, workers in cities offering above-average wages-cities with high productivity, low quality of life, or inefficient housing sectors-pay 27 percent more in federal taxes than otherwise identical workers in cities offering below-average wages. According to simulation results, taxes lower long-run employment levels in high-wage areas by 13 percent and land and housing prices by 21 and 5 percent, causing locational inefficiencies costing 0.23 percent of income, or $28 billion in 2008. Employment is shifted from north to south and from urban to rural areas. Tax deductions index taxes partially to local cost of living, improving locational efficiency. (c) 2009 by The University of Chicago. All rights reserved..

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File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/605309
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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 117 (2009)
Issue (Month): 4 (08)
Pages: 635-667
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Handle: RePEc:ucp:jpolec:v:117:y:2009:i:4:p:635-667

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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.)

  1. David Albouy, 2009. "What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values," NBER Working Papers 14981, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. David Albouy, 2008. "Are Big Cities Really Bad Places to Live? Improving Quality-of-Life Estimates across Cities," NBER Working Papers 14472, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Matthias Wrede, 2009. "Heterogenous Skills and Homogeneous Land: Segmentation and Agglomeration," MAGKS Papers on Economics 200922, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  4. Davis, Morris A. / Ortalo-Magné, François, 2007. "Household Expenditures, Wages, Rents," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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