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Do the rich pay their taxes early?

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  • Andreas M. Fischer
  • Lucca Zachmann

Abstract

This paper examines the effects of household income on interest credits from early tax payments. The hypothesis that the richest households from high-income municipalities pay their income taxes early is tested in a demand specification for interest credit for early tax payments. The empirical analysis uses regional data from 170 municipalities in the canton of Zurich from 2007 to 2013. A one standard deviation increase in the ratio for household income between the mean and the 75th percentile increases the ratio of interest tax credit to total taxes by 5%. The finding that high-income households pay their taxes early supports the view that institutional arrangements supporting early tax payments make the (effective) tax system more regressive for high-income households.

Suggested Citation

  • Andreas M. Fischer & Lucca Zachmann, 2018. "Do the rich pay their taxes early?," Working Papers 2018-08, Swiss National Bank.
    • Handle: RePEc:snb:snbwpa:2018-08
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    File URL: https://www.snb.ch/en/publications/research/working-papers/2018/working_paper_2018_08
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    References listed on IDEAS

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    More about this item

    Keywords

    Early tax payment; demand for interest credit on early tax payment;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D30 - Microeconomics - - Distribution - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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