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The Unequal Geographic Burden of Federal Taxation

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Author Info
David Y. Albouy

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Abstract

In the United States, workers in cities offering above-average wages – cities with high productivity, low quality-of-life, or inefficient housing sectors – pay 30 percent more in federal taxes than otherwise identical workers in cities offering below-average wages. According to simulation results, taxes lower long-run employment levels in high-wage areas by 17 percent and land and housing prices by 28 and 6 percent, causing locational inefficiencies costing 0.33 percent of income, or $40 billion in 2008. Employment is shifted from North to South and from urban to rural areas. Tax deductions index taxes partially to local cost-of-living, improving locational efficiency.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13995.

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Date of creation: May 2008
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Handle: RePEc:nbr:nberwo:13995

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Find related papers by JEL classification:
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
H5 - Public Economics - - National Government Expenditures and Related Policies
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
R1 - Urban, Rural, and Regional Economics - - General Regional Economics

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David Albouy, 2009. "What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values," NBER Working Papers 14981, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. David Albouy, 2008. "Are Big Cities Really Bad Places to Live? Improving Quality-of-Life Estimates across Cities," NBER Working Papers 14472, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Matthias Wrede, 2009. "Heterogenous Skills and Homogeneous Land: Segmentation and Agglomeration," MAGKS Papers on Economics 200922, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
  4. Davis, Morris A. / Ortalo-Magné, François, 2007. "Household Expenditures, Wages, Rents," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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