American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Who Bears the Burden of Local Taxes?
American Economic Journal: Economic Policy
vol. 17,
no. 1, February 2025
(pp. 464–505)
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.Citation
Brülhart, Marius, Jayson Danton, Raphaël Parchet, and Jörg Schläpfer. 2025. "Who Bears the Burden of Local Taxes?" American Economic Journal: Economic Policy 17 (1): 464–505. DOI: 10.1257/pol.20220462Additional Materials
JEL Classification
- H22 Taxation and Subsidies: Incidence
- H71 State and Local Taxation, Subsidies, and Revenue
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets