The Unequal Geographic Burden of Federal Taxation

David Albouy

No 13995, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the United States, workers in cities offering above-average wages - cities with high productivity, low quality-of-life, or inefficient housing sectors - pay 30 percent more in federal taxes than otherwise identical workers in cities offering below-average wages. According to simulation results, taxes lower long-run employment levels in high-wage areas by 17 percent and land and housing prices by 28 and 6 percent, causing locational inefficiencies costing 0.33 percent of income, or $40 billion in 2008. Employment is shifted from North to South and from urban to rural areas. Tax deductions index taxes partially to local cost-of-living, improving locational efficiency.

JEL-codes: H24 H5 H77 J61 R1 (search for similar items in EconPapers)
Date: 2008-05
New Economics Papers: this item is included in nep-geo, nep-lab, nep-pbe, nep-pub and nep-ure
Note: POL PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published as Albouy, David Y. "The Unequal Geographic Burden of Federal Taxation" Journal of Political Economy, vol 117, no. 4, (August 2009) pp. 635-667

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