Tax Competition and Income Sorting: Evidence from the Zurich Metropolitan Area

Abstract

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Income Taxes, Sorting and the Costs of Housing: Evidence from Municipal Boundaries in Switzerland*

“…Most of these studies analyse the valuation of housing characteristics and local taxes in a standard hedonic regression framework, neglecting the endogeneity bias, resulting from unobservable location characteristics. Clustering of wealthy households in localities with more desirable characteristics is certainly relevant in Switzerland (Feld and Kirchg€ assner, 2001;Schmidheiny, 2006;Schaltegger et al, 2011). Moreover, the spatial income distribution and the level of local taxes are determined simultaneously because a larger tax base allows for lower tax rates.…”

“…Likewise, distance to the central business district matters because different types of households value commuting costs differently. Clustering of wealthy households in localities with more desirable characteristics is certainly relevant in Switzerland (Feld and Kirchg€ assner, 2001;Schmidheiny, 2006;Schaltegger et al, 2011). Similarly, fixed migration costs imply that high-income individuals are more responsive to tax differences and locate in the low-tax jurisdiction which further drives up rents.…”

Does Inter‐jurisdictional Competition Engender a “Race to the Bottom”? A Meta‐Regression Analysis

“… There have also been some important recent papers on this theme, for example, Schaltegger et al. (). …”