Does Fiscal Equalization Lead to Higher Tax Rates? Empirical Evidence from Germany

Manuela Krause and Thiess Büttner
Authors registered in the RePEc Author Service: Manuela Kauder

VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: This paper explores the role of fiscal equalization as a driver of states’ tax policy in Germany. We argue that fiscal redistribution of tax revenues provides an incentive for states to increase their tax rates. The analysis exploits differences in the degree of fiscal redistribution among the states over time. The results show a significant effect on tax policy: with full equalization of revenues from the real estate transfer tax the tax rate is about one percentage point higher than without.

JEL-codes: H20 H26 R38 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cta, nep-eur, nep-law, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc17:168214

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