Tax-induced mobility: Evidence from a foreigners' tax scheme in Switzerland

Kurt Schmidheiny and Michaela Slotwinski

Journal of Public Economics, 2018, vol. 167, issue C, 293-324

Abstract: We study location choice and residential mobility responses to local income taxes exploiting a special tax regime which applies to foreign employees residing in Switzerland. The institutional setting used generates a deterministic duration threshold at 5 years of stay in the country, at which the local tax rates an individual faces simultaneously change in all municipalities. We exploit this exogenous variation by applying a fuzzy regression discontinuity design to merged survey and administrative individual-level data. A dynamic location choice model allows us to derive testable hypotheses of individuals' location choices and mobility decisions. Our estimated treatment effects provide causal evidence for tax-induced residential choices and tax induced intra-national mobility.

Keywords: Tax-induced mobility; Income taxes; Regression discontinuity design (search for similar items in EconPapers)
JEL-codes: H24 H31 J61 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:167:y:2018:i:c:p:293-324

DOI: 10.1016/j.jpubeco.2018.04.002

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