search query: @indexterm Fiscal policy / total: 505
reference: 6 / 505
| Author: | Egger, P. Koethenburger, M. Smart, M. |
| Title: | Do fiscal transfers alleviate business tax competition? Evidence from Germany |
| Journal: | Journal of Public Economics
2010 : APR, VOL. 94:3-4, p. 235-246 |
| Index terms: | Germany revenue taxation equilibrium analysis fiscal policy local government |
| Language: | eng |
| Abstract: | According to theory, capacity equalization grants result in local governments internalizing the effects of their tax policies on revenues of neighboring jurisdictions and thus raising equilibrium tax rates. This article empirically analyzes the incentive effects of equalizing transfers on business tax policy by utilizing a natural experiment in the state of Lower Saxony which revised its equalization formula in 1999. Within-state and across-state difference-in-difference estimates are used to analyze the reform effect on municipalities' business tax rates. The results imply that the reform had a significant effect on the municipalities' tax policy in the 4 years after the revision, stabilizing in the fourth to fifth years. The results are robust to various alternative specifications. |
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