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bersetschelkerpfr2022decentralizationprogressivetaxation
Journal article

Decentralization and Progressive Taxation

BP2-STS

  • Berset, Simon Department of Economics, University of Fribourg, Fribourg, Switzerland
  • Schelker, Mark ORCID Department of Economics, University of Fribourg, Fribourg, Switzerland
  • 25.09.2022
Published in:
  • Public Finance Review. - SAGE Publications. - 2022, vol. 51, no. 2, p. 206-235
Public Administration
Economics and Econometrics
Finance
English The traditional literature on fiscal federalism prescribes centralization of redistributive tasks to avoid welfare- or tax-induced migration. More recent work shows that even if the redistributive part of taxation, namely progressivity, is set by an upper-layer government and lower-layer governments only compete via a tax multiplier, income sorting can flatten effective tax progressivity. We argue that upper-layer governments anticipate the impact of local income sorting and strategically adjust their statutory tax schedules. The mobility of the income tax base sets limits to such strategic behavior. We apply causal machine learning methods to identify the effects of decentralization on the statutory tax structure in Switzerland. More decentralized cantons implement more redistributive statutory tax schedules for the least-mobile household types.
Faculty
Faculté des sciences économiques et sociales et du management
Department
Département d'économie politique
Language
  • English
Classification
Economics
License
CC BY
Open access status
green
Identifiers
Persistent URL
https://folia.unifr.ch/unifr/documents/324808
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