Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/124684
Authors: 
Sas, Willem
Year of Publication: 
2015
Series/Report no.: 
55th Congress of the European Regional Science Association: "World Renaissance: Changing roles for people and places", 25-28 August 2015, Lisbon, Portugal
Abstract: 
In this paper, commuting is introduced to a federal economy where benevolent lower-level (state) governments levy an ad valorem tax on labour income. This results in inefficiently low levels of taxation, even when households as a whole do not migrate. Indeed, rather than attracting more workers by lowering taxes, states are out to boost labour supplied by own residents and impede work incentives of non-residents. When the tax base is co-occupied by the federal and state governments secondly, either under- or overtaxation occurs. We find that when taxation is levied ad valorem, undertaxation is more liable to occur than under unit taxation. For the same underlying reasons lastly, fiscal equalisation is expected to give less cause for overtaxation as commonly assumed.
Subjects: 
Commuting
fiscal federalism
tax externalities
tax competition
JEL: 
H71
Document Type: 
Conference Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.