The Impact of Corporate and Personal Income Taxes on the Location of Firms and on Employment: Some Panel Evidence for the Swiss Cantons
The impact of corporate income taxes on location decisions of firms is widely debated in the tax competition literature. Tax rate differences across jurisdictions may lead to distortions of firms’ investment decisions. Empirical evidence on tax induced relocation and subsequent economic development in the U.S. and Europe is still inconclusive. Much the same applies to Switzerland. While there is some evidence on personal income tax competition between Swiss cantons, evidence on the impact of intercantonal corporate income tax differences on the location of business within Switzerland is missing. In this paper, we present econometric evidence on the influence of corporate and personal income taxes on the regional distribution of firms in 1981 and 1991 and on cantonal employment using a panel data set of the 26 Swiss cantons from 1985 to 1997. The results show that corporate and personal income taxes deter firms to locate in a canton and subsequently reduce cantonal employment.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: Poschingerstrasse 5, 81679 Munich|
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo-group.de
More information through EDIRC
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.:
- James R. Hines Jr., 1993.
"Altered States: Taxes and the Location of Foreign Direct Investment in America,"
NBER Working Papers
4397, National Bureau of Economic Research, Inc.
- Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-94, December.
- Newman, Robert J. & Sullivan, Dennis H., 1988. "Econometric analysis of business tax impacts on industrial location: What do we know, and how do we know it?," Journal of Urban Economics, Elsevier, vol. 23(2), pages 215-234, March.
- Robert Tannenwald, 1996. "State business tax climate: how should it be measured and how important is it?," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 23-38.
- Roger H. Gordon, 1983. "An Optimal Taxation Approach to Fiscal Federalism," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 567-586.
- Michael Devereux & Rachel Griffith, 1996.
"Taxes and the location of production: evidence from a panel of US multinationals,"
IFS Working Papers
W96/14, Institute for Fiscal Studies.
- Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June.
- Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
- Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, vol. 76(5), pages 1086-1102, December.
- Assaf Razin & Efraim Sadka, 1989.
"International Tax Competition and Gains from Tax Harmonization,"
NBER Working Papers
3152, National Bureau of Economic Research, Inc.
- Razin, Assaf & Sadka, Efraim, 1991. "International tax competition and gains from tax harmonization," Economics Letters, Elsevier, vol. 37(1), pages 69-76, September.
- Gordon, Roger H, 1992.
" Can Capital Income Taxes Survive in Open Economies?,"
Journal of Finance,
American Finance Association, vol. 47(3), pages 1159-80, July.
- Roger H. Gordon, 1990. "Can Capital Income Taxes Survive in Open Economies?," NBER Working Papers 3416, National Bureau of Economic Research, Inc.
- Lars P. Feld & Gebhard Kirchgässner, 2000.
"Income Tax Competition at the State and Local Level in Switzerland,"
CESifo Working Paper Series
238, CESifo Group Munich.
- Feld, Lars P. & Kirchgassner, Gebhard, 2001. "Income tax competition at the State and Local Level in Switzerland," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 181-213, April.
- Carroll, Robert & Wasylenko, Michael J., 1994. "Do State Business Climates Still Matter? -- Evidence of a Structural Change," National Tax Journal, National Tax Association, vol. 47(1), pages 19-37, March.
- Mark, Stephen T. & McGuire, Therese J. & Papke, Leslie E., 2000. "The Influence of Taxes on Employment and Population Growth: Evidence from the Washington, D.C. Metropolitan Area," National Tax Journal, National Tax Association, vol. 53(n. 1), pages 105-24, March.
- Sinn, Hans-Werner, 1997.
"The selection principle and market failure in systems competition,"
Journal of Public Economics,
Elsevier, vol. 66(2), pages 247-274, November.
- Sinn, Hans-Werner, 1997. "The selection principle and market failure in systems competition," Munich Reprints in Economics 19854, University of Munich, Department of Economics.
- Junge, G & Zarinnejadan, M, 1986. "A Rate-of-Return Model of Investment Behavior for Switzerland," Empirical Economics, Springer, vol. 11(3), pages 153-67.
- Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
- Leslie E. Papke, 1989.
"Interstate Business Tax Differentials and New Firm Location: Evidence from Panel Data,"
NBER Working Papers
3184, National Bureau of Economic Research, Inc.
- Papke, Leslie E., 1991. "Interstate business tax differentials and new firm location : Evidence from panel data," Journal of Public Economics, Elsevier, vol. 45(1), pages 47-68, June.
- Milad ZARIN-NEJADAN, 1992. "Fiscalité, q de Tobin et investissement privé en Suisse," Discussion Papers (REL - Recherches Economiques de Louvain) 1992025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Rosanne Altshuler & Harry Grubert, 1998. "Multinational Financial Policy and the Cost of Capital: The Many Roads Home," Departmental Working Papers 199807, Rutgers University, Department of Economics.
- Kirchgassner, Gebhard & Pommerehne, Werner W., 1996. "Tax harmonization and tax competition in the European Union: Lessons from Switzerland," Journal of Public Economics, Elsevier, vol. 60(3), pages 351-371, June.
- Feld, Lars P, 2000. "Tax Competition and Income Redistribution: An Empirical Analysis for Switzerland," Public Choice, Springer, vol. 105(1-2), pages 125-64, October.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_455. 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: (Klaus Wohlrabe)
If references are entirely missing, you can add them using this form.