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Business Tax Interactions Among Local Governments: An Empirical Analysis Of The French Case

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  • Matthieu Leprince
  • Thierry Madiès
  • Sonia Paty

Abstract

ABSTRACT We study the business tax (“taxe professionnelle”) behavior of the intermediate level (department) of local government in France and test in the same model the two hypotheses that department tax rates are explained by upper tier (region) tax rates and by tax rates chosen by other departments. We first reject the hypothesis of tax interactions between departments and regions, the two upper levels of local governments. Second, we provide evidence that business tax interactions among departments are significant. Including the vertical dimension in the estimated model does not lead to a decrease in the horizontal tax interactions parameter, nor to its nonsignificance.

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  • Matthieu Leprince & Thierry Madiès & Sonia Paty, 2007. "Business Tax Interactions Among Local Governments: An Empirical Analysis Of The French Case," Journal of Regional Science, Wiley Blackwell, vol. 47(3), pages 603-621, August.
  • Handle: RePEc:bla:jregsc:v:47:y:2007:i:3:p:603-621
    DOI: 10.1111/j.1467-9787.2007.00522.x
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