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Income vs. property tax competition: A normative comparison

Kuhlmey, Florian. (2017) Income vs. property tax competition: A normative comparison. WWZ Working Papers, 2017 (18). Basel.

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Abstract

Income and property taxation are among the most prevalent policy instruments to finance local expenditure in countries with a high degree of decentralization. However, little is known about their relative efficiency and redistributive properties. This paper compares both tax instruments within the same framework and investigates their relative attractiveness to finance local expenditure. It further allows for inter-municipal spillovers and rivalry in the consumption of the publicly provided good. The analytical model identifies the different inefficiencies in both tax regimes which include intra- and inter-municipal free-riding. In a numerical illustration, the model is solved for the resulting equilibria. This allows to quantify the gross welfare loss from decentralization and also reveals a decomposition of the welfare loss into its components.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Public Economics / Public Finance (Hintermann)
06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Umweltökonomie (Krysiak)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Kuhlmey, Florian
Item Type:Working Paper
Publisher:WWZ, University of Basel
Number of Pages:17
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
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Identification Number:
  • handle: RePEc:bsl:wpaper:2017/18
Last Modified:05 Jun 2019 06:54
Deposited On:07 Mar 2018 11:48

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