Umeå University's logo

umu.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Horizontal interactions in local personal income taxes
Umeå University, Faculty of Social Sciences, Centre for Regional Science (CERUM). Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.ORCID iD: 0000-0002-7905-1825
2021 (English)In: The annals of regional science, ISSN 0570-1864, E-ISSN 1432-0592, Vol. 67, p. 27-46Article in journal (Refereed) Published
Abstract [en]

Theories of inter-jurisdictional tax and yardstick competition assume that the tax decisions of one jurisdiction will influence the tax decisions of other jurisdictions. This paper empirically addresses the issue of horizontal dependence in local personal income tax rates across jurisdictions. Based on a large data set covering Swedish municipalities over a period of 14 years, we test for interactions across municipalities that share a common border, across municipalities within a distance of 100 km of each other, and across municipalities with similar political representation in the local council. We also test the hypothesis that the tax rate of relatively larger municipalities has a greater influence on their neighbors' tax rate compared to the influence of their smaller neighbors. Our results suggest that when lagged tax rates are controlled for, the horizontal correlation across municipalities that share a common border or are within a distance of 100 km from each other becomes insignificant. This result is of importance as it suggests that lagged tax rates should be included or at least tested for when testing for horizontal interactions or mimicking in local tax rates. However, our results support the hypothesis of horizontal interactions across municipalities that share a common border when the influence of neighboring municipalities is also weighted by their relative population size, i.e. relatively larger neighbors tend to have a greater impact on their neighbor's tax rates than their relatively smaller neighbors. This is of importance as it suggests that distance or proximity matters, although only in combination with the relative population size. We also find some evidence of horizontal dependence across municipalities with similar political preferences.

Place, publisher, year, edition, pages
Springer, 2021. Vol. 67, p. 27-46
National Category
Economics
Identifiers
URN: urn:nbn:se:umu:diva-178854DOI: 10.1007/s00168-020-01039-6ISI: 000608952600001Scopus ID: 2-s2.0-85100092040OAI: oai:DiVA.org:umu-178854DiVA, id: diva2:1519845
Available from: 2021-01-19 Created: 2021-01-19 Last updated: 2021-12-30Bibliographically approved

Open Access in DiVA

fulltext(1614 kB)83 downloads
File information
File name FULLTEXT02.pdfFile size 1614 kBChecksum SHA-512
e21f00d4e87f7eeb3f997dba6f24563b8f7cb2df8071b915af1b55db85350f2d6d0e5784b38d4f2e448d96ae55a3b88be6abdd34028af636838ea5c380279a07
Type fulltextMimetype application/pdf

Other links

Publisher's full textScopus

Authority records

Lundberg, Johan

Search in DiVA

By author/editor
Lundberg, Johan
By organisation
Centre for Regional Science (CERUM)Economics
In the same journal
The annals of regional science
Economics

Search outside of DiVA

GoogleGoogle Scholar
Total: 182 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 348 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf