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Do the rich pay their taxes early?

Author

Listed:
  • Andreas M. Fischer

    (Swiss National Bank and CEPR)

  • Lucca Zachmann

    (Swiss National Bank)

Abstract

This paper examines the effects of household income on interest credits from early tax payments. The hypothesis that the richest households pay their income taxes early is tested in a demand specification for interest credit on early tax payments. The empirical analysis uses regional data from 170 municipalities in the canton of Zurich from 2007 to 2013. A one standard deviation increase in the ratio for household income between the mean and the 75th percentile increases the ratio of interest tax credit to total taxes by 5%. The finding that high-income households pay their taxes early supports the view that institutional arrangements supporting early tax payments make the (effective) tax system more regressive.

Suggested Citation

  • Andreas M. Fischer & Lucca Zachmann, 2020. "Do the rich pay their taxes early?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 194-214, February.
    • Handle: RePEc:kap:itaxpf:v:27:y:2020:i:1:d:10.1007_s10797-019-09541-0
    DOI: 10.1007/s10797-019-09541-0
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    More about this item

    Keywords

    Early tax payment; Demand for interest credit on early tax payment;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D30 - Microeconomics - - Distribution - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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