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Regional impact of commuter wage taxes

  • Paul Hettler
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    This paper presents a model of interurban and intraurban location that is used to consider the impact of wage taxes on housing and labor markets in a metropolitan area. The focus of the paper is to examine the differences in the regional impact of commuter wage taxes (source-based wage taxes) and residents-only wage taxes (residence-based wage taxes). The model illustrates that suburban land rent and wages can be affected in equilibrium by central city policies and that the mix of public goods (that is, whether they benefit households or firms) as well as those who bear the burden of financing them has implications regarding land values and shifts in relative population and production. Understanding such linkages is important in the creation and analysis of regional economic policy. Copyright International Atlantic Economic Society 2004

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    Article provided by International Atlantic Economic Society in its journal Atlantic Economic Journal.

    Volume (Year): 32 (2004)
    Issue (Month): 3 (September)
    Pages: 191-200

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    Handle: RePEc:kap:atlecj:v:32:y:2004:i:3:p:191-200
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    1. Sasaki, Komei, 1991. "Interjurisdictional Commuting and Local Public Goods," The Annals of Regional Science, Springer, vol. 25(4), pages 271-85.
    2. Joe P. Mattey, 1996. "Evolution of the quality of life in the U.S," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue sep13.
    3. Katharine L. Bradbury & Helen F. Ladd, 1987. "City Taxes and Property Tax Bases," NBER Working Papers 2197, National Bureau of Economic Research, Inc.
    4. Gyourko, Joseph & Tracy, Joseph, 1989. "The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1208-31, October.
    5. Haughwout, Andrew F., 1997. "Central city infrastructure investment and suburban house values," Regional Science and Urban Economics, Elsevier, vol. 27(2), pages 199-215, April.
    6. Börje Johansson & Johan Klaesson & Michael Olsson, 2003. "Commuters’ non-linear response to time distances," Journal of Geographical Systems, Springer, vol. 5(3), pages 315-329, November.
    7. Braid, Ralph M., 2002. "The Spatial Effects of Wage or Property Tax Differentials, and Local Government Choice between Tax Instruments," Journal of Urban Economics, Elsevier, vol. 51(3), pages 429-445, May.
    8. Hoyt, William H., 1992. "Market power of large cities and policy differences in metropolitan areas," Regional Science and Urban Economics, Elsevier, vol. 22(4), pages 539-558, November.
    9. Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, vol. 78(1), pages 89-107, March.
    10. Charles A. M. de Bartolome & Stephen L. Ross, 2002. "Equilibria with Local Governments and Commuting: Income Sorting vs. Income Mixing," Working papers 2002-01, University of Connecticut, Department of Economics, revised Mar 2003.
    11. Ladd, Helen F. & Bradbury, Katharine L., 1988. "City Taxes and Property Tax Bases," National Tax Journal, National Tax Association, vol. 41(4), pages 503-23, December.
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