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Who Bears the Burden of Local Taxes?

Author

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  • Marius Brülhart
  • Jayson Danton
  • Raphaël Parchet
  • Jörg Schläpfer

Abstract

We study the distributional effects of local taxes. They turn out to be strikingly progressive. We calibrate a municipality-level structural model with quasi-experimental estimates of taxpayer mobility by family type. Households with children are found to be less mobile than households without children and to have stronger preferences for locally provided public goods. Combined with capitalization of taxes into housing prices and nonhomothetic housing demand, this implies that the incidence of local income taxes mainly falls on high-income childless households. Increases in local income taxes, even if flat rate, turn out to be more progressive than property taxes.

Suggested Citation

  • Marius Brülhart & Jayson Danton & Raphaël Parchet & Jörg Schläpfer, 2025. "Who Bears the Burden of Local Taxes?," American Economic Journal: Economic Policy, American Economic Association, vol. 17(1), pages 464-505, February.
    • Handle: RePEc:aea:aejpol:v:17:y:2025:i:1:p:464-505
    DOI: 10.1257/pol.20220462
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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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