A Local Income and Corporation Tax as an Alternative to the German Local Business Tax: An Empirical Analysis for Selected Municipalities
The paper empirically analyses the impact on individual municipalities of replacing the German local business tax by a local surcharge on income and corporation tax. The microsimulation models used for this and refined for the present paper originate in calculations carried out for the Federal Ministry of Finance in cooperation between the Federal Statistical Office and the Humboldt University in Berlin. The data basis is formed by the roughly 30 million individual data sets of the most up-to-date income and local business tax statistics provided by the Federal Statistical Office. A local surcharge tax which, like the BDI/VCI model analysed, assigns tax revenue incurred on profits to the municipality of permanent establishment and that on other income to the domicile municipality, affects the revenue situation of the municipalities in highly differing ways. The losers in such a local tax reform include those municipalities in which an above-average number of industrial and commercial enterprises are resident. These are the “core towns” of the Old Federal Laender in particular. By contrast, the revenue situation of the surrounding municipalities and of the municipalities with a rural character would considerably improve on average. However, the core towns in the New Federal Laender which are currently tax-weak because they have little industry would also improve their revenue situation in most cases by applying a surcharge tax. In order to maintain the financial status quo, the core towns in the Old Federal Laender in particular would have to levy relatively high local tax rates, whilst the surrounding municipalities would be able to become more attractive by applying tax rates which as a rule would be much lower. The consequence of this would be that highincome earners in the core towns would have a not inconsiderable incentive to change their place of residence for tax purposes, which would further worsen the financial situation of the core towns.
Volume (Year): 226 (2006)
Issue (Month): 3 (June)
|Contact details of provider:|| Web page: https://www.degruyter.com|
|Order Information:||Web: https://www.degruyter.com/view/j/jbnst|
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.:
- Feldstein, Martin & Wrobel, Marian Vaillant, 1994. "Can State Taxes Redistribute Income?," Scholarly Articles 2799054, Harvard University Department of Economics.
- Feldstein, Martin & Wrobel, Marian Vaillant, 1998. "Can state taxes redistribute income?," Journal of Public Economics, Elsevier, vol. 68(3), pages 369-396, June.
- Sasaki, Komei, 1991. "Interjurisdictional Commuting and Local Public Goods," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 25(4), pages 271-285.
- Nico A. Hansen & Anke S. Kessler, 2001. "The Political Geography of Tax H(e)avens and Tax Hells," American Economic Review, American Economic Association, vol. 91(4), pages 1103-1115, September.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
- John, Peter & Dowding, Keith & Biggs, Stephen, 1995. "Residential Mobility in London: A Micro-Level Test of the Behavioural Assumptions of the Tiebout Model," British Journal of Political Science, Cambridge University Press, vol. 25(03), pages 379-397, July.
- Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-858, August.
- Sander, Matthias, 2001. "Ersatz der Gewerbesteuer durch eine Gemeindeeinkommensteuer," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW – German National Library of Economics / Leibniz Information Centre for Economics, vol. 81(8), pages 447-455.
When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:226:y:2006:i:3:p:285-307. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.