Sub-metropolitan Tax Competition with Household and Capital Mobility

Tidiane Ly

Working Papers from HAL

Abstract: This paper investigates the efficiency properties of tax competition between submetropolitan jurisdictions when capital, residents and workers are mobile, and both households and firms compete for local land markets. We analyze two decentralized equilibria: (1) with a local tax on residents and two separate local taxes on capital and land inputs, efficiency is achieved and the existence of a marginal fiscal cost due to residents' mobility is revealed; (2) combination of the taxes on capital and land inputs into a single business property tax leads local authorities to charge inefficiently high taxation on capital. We show that capital mobility induces a reduction in the business land taxation and local public inputs are used to offset the distorting effects of the property tax, accounting for the distorting impact of workers' mobility.

Keywords: Tax competition; Mobility; Public goods; Public inputs (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-pbe and nep-ure
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01349869v1
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Related works:
Journal Article: Sub-metropolitan tax competition with household and capital mobility (2018)
Working Paper: Sub-metropolitan Tax Competition with Household and Capital Mobility (2016)
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