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Alleged Tax Competition: The Mysterious Death of InheritanceTaxes in Switzerland

Marius Brülhart and Raphaël Parchet ()

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: Interjurisdictional competition over mobile tax bases is an easily understood mechanism, but actual tax-base elasticities are difficult to estimate. Political pressure for reducing tax rates could therefore be based on erroneous estimates of the mobility of tax bases. We show that tax competition provided the overwhelmingly dominant argument in the policy debates leading to a succession of reforms of bequest taxation by Swiss cantons. Yet, we find only very weak statistical evidence of a relationship between tax burdens on bequests and the concerned tax base of wealthy elderly individuals. Moreover, inheritance tax revenues are found to increase in inheritance tax rates even in the long run, and actual tax rates lie well below the revenue-maximising levels throughout. The alleged pressures of tax competition did not seem in reality to exist.

Keywords: tax competition; inheritance taxation; fiscal federalism (search for similar items in EconPapers)
JEL-codes: H3 H7 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-06
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Citations: View citations in EconPapers (5) Track citations by RSS feed

Published in Journal of Public Economics, (111), March 2014, pp. 63-78

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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:10.04

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