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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 fac-tors 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, the income tax rates in cantons are the lower, the lower are the tax rates of their neighbors.

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Bibliographic Info

Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2005-19.

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Date of creation: Apr 2005
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Handle: RePEc:cra:wpaper:2005-19

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Keywords: Tax competition; strategic tax setting; personal income taxes;

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References

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Citations

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Cited by:
  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. Jan Schnellenbach, 2008. "Rational Ignorance is not Bliss: When do Lazy Voters Learn from Decentralised Policy Experiments?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 228(4), pages 372-393, August.
  9. Marcel Gérard & Hubert Jayet & Sonia Paty, 2009. "Tax Interactions among Belgian Municipalities: Does Language Matter?," CESifo Working Paper Series 2558, CESifo Group Munich.
  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. Ruiz, Fernando & Gerard, Marcel, 2008. "Is there evidence of strategic corporate tax interaction among EU countries?," MPRA Paper 10094, University Library of Munich, Germany.

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