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Title:Fiscal externalities in local tax competition: empirical evidence from a panel of German jurisdictions PDF Logo
Authors:Buettner, Thiess
Issue Date:2001
Series/Report no.:ZEW Discussion Papers 01-11
Abstract:This paper is concerned with fiscal externalities arising from local taxation of a mobile factor. Using a panel of more 1100 local jurisdictions it provides empirical evidence on how the local tax rate as well as the tax rate in the neighborhood affect the local tax base. The results support the existence of fiscal externalities: an increase in the tax rate of local neighbors exerts a positive effect on the tax base whereas an increase of the own tax rate has a negative effect, and a joint increase of the tax rate at the local jurisdiction and in its neighborhood has no significant effect on the interjurisdictional distribution of the tax base. However, in the considered case tax competition is alleviated by revenue sharing rules which reduce the jurisdictions' incentive to lower tax rates in order to attract capital.
Subjects:Local Capital Taxation
Fiscal Externalities
Tax Competition
Fiscal Equalization Grant
Empirical Investigation
Panel Data
JEL:H73
H72
D62
C23
H71
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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