Intergovernmental Fiscal Transfers and Tax Efforts: Evidence from Japan

Takeshi Miyazaki

MPRA Paper from University Library of Munich, Germany

Abstract: The present study examines the incentiv¬e effects of fiscal equalization transfers on local corporate tax rates from theoretical and empirical perspectives. The study focuses on additional corporate tax on capital, which is exempt from calculations of equalization grants. A theoretical investigation reveals that a rise in equalization rate increases additional capital tax rates. The theoretical prediction is empirically examined using panel data of Japanese municipalities for 1990–2000. It is found that a higher equalization rate in fiscal equalizing transfers gives municipalities an incentive to raise corporate tax rates exempt from the transfer scheme.

Keywords: Intergovernmental fiscal transfers; regression discontinuity design; tax competition; tax effort (search for similar items in EconPapers)
JEL-codes: H7 H71 H77 (search for similar items in EconPapers)
Date: 2016-10
New Economics Papers: this item is included in nep-acc, nep-fdg, nep-pbe, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:74337

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