Tax base effects and fiscal externalities of local capital taxation: evidence from a panel of German jurisdictions

Buettner, Thiess

doi:10.1016/s0094-1190(03)00039-1

Cited by 108 publications

(114 citation statements)

References 21 publications

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“…Spatial tax interaction is, for instance, demonstrated for the local business tax for cities and municipalities in the German state of Baden-Württemberg by Buettner (2001). Similar evidence for inter-municipal interactions has been found for local business property taxes in the metropolitan area of Boston (Brueckner and Saavedra, 2001) and the Canadian province of British Columbia (Brett and Pinkse, 2000).…”

Section: The Spatial Structure Of Competition -Perceptions Of Local Dsupporting

confidence: 61%

“…The former is levied directly on business earnings, so that it can be regarded as a tax on capital and, as such, a highly mobile tax base. 6 These characteristics have already been exploited by empirical works which find strong evidence for interactions between neighbouring jurisdictions in this state (see Buettner, 2001, andHauptmeier et al, 2012). 4 We realise that beliefs about mobility do not necessarily have to be identical with real mobility, and therefore decision-makers might build their decisions on wrong perceptions of the reality.…”

Section: Survey Description and Resultsmentioning

confidence: 99%

“…6 Buettner (2003) argues that the business tax can be regarded as a capital income tax since the definition of taxable business earnings does not only include profits but also a major part of interest payments.…”

Section: Survey Description and Resultsmentioning

confidence: 99%

“…Brett and Pinkse (2000) as well as Brett and Tardif (2008) do not find any effect of neighbours' levels of business property tax rates on the tax base for a sample of municipalities in the Canadian province of British Columbia. Some positive evidence comes from Buettner (2003), who studies the tax base effect for the local business tax in the state of Baden-Württemberg.…”

Section: The Spatial Structure Of Competition -Perceptions Of Local Dmentioning

confidence: 99%

“…Few of the empirical contributions on local tax competition (e.g., Buettner, 2001;Brueckner and Saavedra, 2001;Hauptmeier et al, 2012) enrich the empirical analyses with explicit theoretical considerations. These contributions are based on standard tax competition models in the tradition of the workhorse model by Zodrow and Mieszkowski (1986) and are modified by restricting the number of competing jurisdictions.…”

Section: Introductionmentioning

confidence: 99%

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Tax and the City - A Theory of Local Tax Competition and Evidence for Germany

Janeba

Osterloh

2012

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:http://ftp.zew.de/pub/zew-docs/dp/dp12005.pdf Non-technical summaryIn this paper we use survey responses of mayors from cities and municipalities in the German state of Baden-Württemberg to study the "true" spatial structure of local tax competition. The size of the jurisdiction and, in particular, its economic function turn out to be the important determinants of the decision-maker's perception of the intensity of competition. In particular, respondents from urban centres perceive a much higher intensity of competition for firms with respect to competing jurisdictions which are distant or even located in other countries. Our empirical findings confirm the assumption of the empirical literature about the importance of neighbourhood competition, but it also shows that another important factor is missing. In particular, the assumption of the empirical literature that competition takes place only among neighbours is at odds with the theoretical approaches where all jurisdictions compete simultaneously. The existing standard models, however, are incapable of explaining the empirical particularities of local competition.These empirical findings motivate our sequential tax competition model which considers a rich competition structure. Essentially, we assume a number of metropolitan regions which each consist of one city centre and a number of surrounding (rural) jurisdictions.The model has two levels of competition for mobile capital: first, cities simultaneously compete for mobile capital by setting their tax policies (which can be interpreted as competition for large scale investments, such as headquarters); second, rural areas compete simultaneously for capital within their metropolitan area (which corresponds to the neighbourhood competition).We are especially interested in the effects of a rise in the number of metropolitan regions, which represents the increase in external competition, for example through globalisation, Eastern enlargement of the EU or German unification. It is shown thatsimilarly to standard models -the capital tax rates of the cities converge to zero, but they stay positive for the hinterlands. Moreover, cities are more affected by an increase in external competition than hinterlands, since they reduce capital tax rates more and shift more from mobile capital to immobile labour taxation. In contrast to existing models, our results imply that larger jurisdictions do not necessarily rely mor...

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Section: The Spatial Structure Of Competition -Perceptions Of Local Dsupporting

confidence: 61%

Section: Survey Description and Resultsmentioning

confidence: 99%

Section: Survey Description and Resultsmentioning

confidence: 99%

Section: The Spatial Structure Of Competition -Perceptions Of Local Dmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Tax and the City - A Theory of Local Tax Competition and Evidence for Germany

Janeba

Osterloh

2012

SSRN Journal

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Do Industrial Tax Abatements Spur Property Value Growth?

Kang¹,

Reese²,

Skidmore³

2015

J Policy Anal Manage

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Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property

Weber

Burnett

Xiarchos³

2016

J Policy Anal Manage

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We study the effects of the property tax base shock caused by natural gas drilling in the Barnett Shale in Texas-a state that taxes oil and gas wells as property. Over the boom and bust in drilling, housing appreciation closely followed the oil and gas property tax base, which expanded the total tax base by 23 percent at its height. The expansion led to a decline in property tax rates while maintaining or increasing revenues to schools. Overall, each $1 per student increase in the oil and gas property tax base increased the value of the typical home by $0.15. Some evidence suggests that the cumulative density of wells nearby may lower housing values, indicating that drilling could reduce local welfare without policies to increase local public revenues.

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Tax base effects and fiscal externalities of local capital taxation: evidence from a panel of German jurisdictions

Cited by 108 publications

References 21 publications

Tax and the City - A Theory of Local Tax Competition and Evidence for Germany

Tax and the City - A Theory of Local Tax Competition and Evidence for Germany

Do Industrial Tax Abatements Spur Property Value Growth?

Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property

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