Local income tax competition with progressive taxes and a fiscal equalization scheme

Florian Kuhlmey ()
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Florian Kuhlmey: University of Basel

Working papers from Faculty of Business and Economics - University of Basel

Abstract: This paper develops a model of local income tax competition with a progressive tax scheme and a built-in fiscal equalization scheme. Both aspects are central to policy makers: The progressivity for equity reasons, and the fiscal equalization to prevent a race to the bottom and to limit the degree of segregation of households according to income. The model is calibrated to the metropolitan area of Zurich (Switzerland), and policy evaluations reveal that a progressive tax scheme as the basis for local tax competition causes strong segregating forces that can only to some extent be compensated by the fiscal equalization scheme.

Keywords: Tax competition; income taxation; fiscal equalization; progressive taxation; segregation. (search for similar items in EconPapers)
JEL-codes: H3 H7 R1 R2 (search for similar items in EconPapers)
Date: 2017-11-29
New Economics Papers: this item is included in nep-geo, nep-pbe, nep-pub and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2017/17

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