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Alleged tax competition: The mysterious death of bequest taxes in Switzerland

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  • Brülhart, Marius
  • Parchet, Raphaël

Abstract

Interjurisdictional competition over mobile tax bases is an easily understood mechanism, but actual tax-base elasticities are difficult to estimate. Political pressure for reducing tax rates could therefore be based on erroneous estimates of the mobility of tax bases. We show that tax competition provided the most prominent argument in the policy debates leading to a succession of reforms of bequest taxation by Swiss cantons. Yet, canton-level panel data spanning multiple bequest tax reforms over a 36-year period suggest the relevant tax base, high-income retirees, to be relatively inelastic with respect to tax rates. The alleged pressures of tax competition did not seem in reality to exist.

Suggested Citation

  • Brülhart, Marius & Parchet, Raphaël, 2014. "Alleged tax competition: The mysterious death of bequest taxes in Switzerland," Journal of Public Economics, Elsevier, vol. 111(C), pages 63-78.
  • Handle: RePEc:eee:pubeco:v:111:y:2014:i:c:p:63-78
    DOI: 10.1016/j.jpubeco.2013.12.009
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    Citations

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    Cited by:

    1. Marius Brulhart & Didier Dupertuis & Elodie Moreau, 2016. "Inheritance Flows in Switzerland, 1911-2011," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 16.05, Université de Lausanne, Faculté des HEC, DEEP.
    2. Marius Brülhart & Jonathan Gruber & Matthias Krapf & Kurt Schmidheiny, 2016. "Taxing Wealth: Evidence from Switzerland," NBER Working Papers 22376, National Bureau of Economic Research, Inc.
    3. Bütler, Monika & Ramsden, Alma, 2017. "How taxes impact the choice between an annuity and the lump sum at retirement," Economics Working Paper Series 1701, University of St. Gallen, School of Economics and Political Science.
    4. Ania, Ana B. & Wagener, Andreas, 2016. "Decentralized redistribution in a laboratory federation," Journal of Urban Economics, Elsevier, vol. 93(C), pages 49-59.
    5. Luca Salvadori & José María Durán-Cabré & Alejandro Esteller-Moré, 2012. "Regional Competition On Tax Administration," ERSA conference papers ersa12p184, European Regional Science Association.
    6. repec:ses:arsjes:2017-ii-1 is not listed on IDEAS
    7. Julio López Laborda & Fernando Rodrigo Sauco, 2017. "Movilidad de los contribuyentes de rentas altas en respuesta a las diferencias regionales en los impuestos personales," Studies on the Spanish Economy eee2017-28, FEDEA.
    8. Schneider, Andrea, 2017. "Policy diffusion and the competition for mobile resources," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168203, Verein für Socialpolitik / German Economic Association.
    9. repec:spr:sjecst:v:154:y:2018:i:1:d:10.1186_s41937-017-0012-9 is not listed on IDEAS
    10. Brunner Johann K., 2014. "Die Erbschaftsteuer – Bestandteil eines optimalen Steuersystems?," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 15(3), pages 199-218, October.
    11. Bütler, Monika & Ramsden, Alma, 2016. "Pricing annuities: The role of taxation in retirement decisions," Annual Conference 2016 (Augsburg): Demographic Change 145525, Verein für Socialpolitik / German Economic Association.
    12. José Durán-Cabré & Alejandro Esteller-Moré & Luca Salvadori, 2015. "Empirical evidence on horizontal competition in tax enforcement," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(5), pages 834-860, October.
    13. repec:spr:sjecst:v:153:y:2017:i:2:d:10.1007_bf03399435 is not listed on IDEAS
    14. David R. Agrawal & Dirk Foremny, 2018. "Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms," CESifo Working Paper Series 7027, CESifo Group Munich.
    15. Alexander Krenek & Margit Schratzenstaller, 2018. "A European Net Wealth Tax," WIFO Working Papers 561, WIFO.

    More about this item

    Keywords

    Tax competition; Bequest taxation; Fiscal federalism;

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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