Mobility and local income redistribution

Sigrid Roehrs () and David Stadelmann
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Sigrid Roehrs: University of Zurich
Authors registered in the RePEc Author Service: Sigrid Röhrs ()

No 2010/4, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: Mobility may undermine local income redistribution in federal systems,because rich taxpayers can evade high taxes by moving to low tax jurisdictions. By analyzing a model of local income redistribution with endogenous voting, income heterogeneity and an exogenously given degree of mobility we focus explicitly on the link between redistribution and mobility. Our findings suggest a nonlinear relationship between redistribution and mobility: high and low degrees of mobility permit major income redistribution as income sorting is absent, while a medium degree of mobility leads to high differences in tax rates between jurisdictions and thus to income sorting and less redistribution.

Keywords: Redistribution; political economy; locational equilibrium; taxes; tax havens (search for similar items in EconPapers)
JEL-codes: H23 H71 H73 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010
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