Who Bears the Burden of Local Taxes?

Brülhart, Marius, Jayson Danton, Parchet, Raphaël and Schläpfer, Jörg
Authors registered in the RePEc Author Service: Joerg Schlaepfer and Marius Brülhart

No 15826, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the incidence of local taxes on the welfare of heterogeneous residents. A structural model of imperfectly mobile households who differ in terms of family status and income allows us to back out local public-good preferences and household mobility. We calibrate the model with plausibly causal tax-base and housing-price elasticity estimates, based on municipality-level data for Switzerland. We find that households with children have stronger preferences for locally provided public goods and are less mobile than households without children. Combined with capitalization of taxes into housing prices and non-homothetic housing demand, this implies that the burden of local income taxes is mainly borne by above-median income households without children. Even absent a graduated rate schedule, the incidence of local income taxes is found to be more progressive than that of local property taxes.

Keywords: Tax incidence; Local income taxes; Tax capitalization; Housing prices (search for similar items in EconPapers)
JEL-codes: H24 H71 R21 R31 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-cwa, nep-eur, nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Journal Article: Who Bears the Burden of Local Taxes? (2025)
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