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Do the rich pay their taxes early?

Andreas Fischer () and Lucca Zachmann

No 12491, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines the distributional effects of interest credits from early tax payments on average household income at the municipality level. The hypothesis that households from high-income municipalities pay their income taxes early is tested in a demand specification for interest credit for early tax payments. The empirical analysis considers regional data from 170 municipalities in the canton of Zurich from 2007 to 2013. The income elasticity of interest credit for early tax payments is estimated to be near unity for the top 5th percentile of average household income, whereas the same elasticity is below one-half for the lower 95th percentile and is statistically insignificant. The finding that high-income households pay their taxes early supports the view that the rich are not liquidity constrained. Early tax payments make the tax system more regressive for high-income households.

Keywords: demand for interest credit on early tax payment; early tax payment (search for similar items in EconPapers)
JEL-codes: D14 D30 E21 E41 H31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
Date: 2017-12
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