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BUSINESS TAX INTERACTIONS AMONG LOCAL GOVERNMENTS: AN EMPIRICAL ANALYSIS OF THE FRENCH CASE
Author(s) -
Leprince Matthieu,
Madiès Thierry,
Paty Sonia
Publication year - 2007
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.2007.00522.x
Subject(s) - dimension (graph theory) , local government , ad valorem tax , public economics , economics , government (linguistics) , tax reform , indirect tax , test (biology) , business , monetary economics , political science , public administration , paleontology , linguistics , philosophy , mathematics , pure mathematics , biology
We study the business tax (“taxe professionnelle”) behavior of the intermediate level (department) of local government in France and test in the same model the two hypotheses that department tax rates are explained by upper tier (region) tax rates and by tax rates chosen by other departments. We first reject the hypothesis of tax interactions between departments and regions, the two upper levels of local governments. Second, we provide evidence that business tax interactions among departments are significant. Including the vertical dimension in the estimated model does not lead to a decrease in the horizontal tax interactions parameter, nor to its nonsignificance.