Tax competition effects of a minimum tax rate: Empirical evidence from German municipalities

Thiess Buettner and Maximilian Poehnlein
Authors registered in the RePEc Author Service: Thiess Büttner

Journal of Public Economics, 2024, vol. 236, issue C

Abstract: This paper explores the effects of a federal law that obligates previously unregulated municipalities in Germany to set a minimum tax rate on firms’ taxable profits. In particular, we examine the tax-policy response of municipalities that compete locally with “tax-haven municipalities”, i.e.municipalities that originally have set lower and, in some cases, even zero tax rates. The analysis distinguishes treated and not-treated municipalities based on their distance to a tax-haven. Our results show that the majority of municipalities do not change their tax policy. Apart from the tax-havens, only high-tax municipalities show a response – they reduce the business tax rate without experiencing a decline in tax revenues.

Keywords: Tax competition; Minimum tax; Local business tax; Tax havens (search for similar items in EconPapers)
JEL-codes: H71 H77 H87 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:236:y:2024:i:c:s0047272724000847

DOI: 10.1016/j.jpubeco.2024.105148

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