Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123158
Authors: 
Schmidheiny, Kurt
Slotwinski, Michaela
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper 5518
Abstract: 
We study behavioral responses to local income taxes exploiting a special tax regime which applies to foreign employees residing in Switzerland. The used institutional setting generates two thresholds through which locally heterogeneous taxation is assigned: An income threshold at 120,000 Swiss francs and a duration threshold at 5 years of stay in Switzerland. We exploit these thresholds by applying a discontinuity in density design and a fuzzy RDD to administrative income data. We find causal evidence for strategic income bunching for wage earners and tax induced intra-national mobility. Several pieces of evidence suggest that individuals have to “learn the tax code” and that knowledge and information transmission through local networks plays a major role in the behavioral response to tax incentives.
Subjects: 
income bunching
tax induced mobility
income taxes
regression discontinuity design
JEL: 
H24
H31
J61
Document Type: 
Working Paper

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