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Elschner, Christina
Lammersen, Lothar
Overesch, Michael
Schwager, Robert
Year of Publication: 
Series/Report no.: 
ZEW Discussion Papers 05-31
Company taxes and taxes on highly skilled labour both influence the attractiveness of a particular region as a location for investment. We measure the effective tax burden on capital investment and on highly qualified labour in 33 locations across Europe and the United States. We then correlate both types of tax burden in order to study the different tax policy strategies applied in different countries. We identify three causes for different strategies: political institutions, preferences for redistribution and equality, and the position in globalisation and growth. Small countries, high growth rates, and federal structure with high tax autonomy stand for countries with lower tax burdens, especially on companies. Large countries, representative democracies with coalitions, and a high preference for redistribution are likely to induce higher tax burdens.
effective tax burden
tax policy
company taxation
personal income tax
Document Type: 
Working Paper
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