Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235104 
Year of Publication: 
2021
Series/Report no.: 
KOF Working Papers No. 490
Publisher: 
ETH Zurich, KOF Swiss Economic Institute, Zurich
Abstract: 
I analyze mobility responses to the unique introduction of regressive local income schedule in the Swiss Canton of Obwalden in 2006, which was aimed at attracting the top 1%. Differencein-Differences estimations comparing Obwalden to all other cantons confirm that the reform successfully attracted rich taxpayers: by 2016, the share of rich in the canton more than doubled and average income per taxpayer was 16% higher relative to 2005. Using individual tax data and an instrumental variable approach, I find a large elasticity of the stock of rich taxpayers of 1.5-2 with respect to the average net-of-tax rate. The corresponding flow elasticity ranges from 6.5 to 10. However, the reform did not yield any Laffer effects. Finally, I find positive effects on local employment: the number of jobs per 1,000 inhabitants rose by an estimated 2.3% relative to other cantons and compared to 2005. However, these employment effects are likely driven by a simultaneous reduction of the corporate tax rate.
Subjects: 
Mobility
Personal income tax
Local taxes
Tax competition
Regressive income tax
JEL: 
H24
H31
H71
H73
R23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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