Business taxes and the electoral cycle

• 成果类型: Article
• 署名作者: Foremny, Dirk; Riedel, Nadine
• 署名单位: University of Barcelona; Ruhr University Bochum
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2014.04.005
• 发表日期: 2014
• 页码: 48-61
• 关键词: Local business tax choice; political budget cycles; political economy; Election cycle

摘要

The purpose of this paper is to assess whether the timing of elections affects tax policy choices. To do so, we exploit information on the German local business tax which is set autonomously by German municipalities. As the dates for local council elections vary across German states, the data allows us to disentangle effects related to the timing of elections from common trends. The findings support the notion of a political cycle in tax setting as the growth in local business tax rates is significantly reduced in the election year and the year prior to the election, while it significantly increases in the year after the election. This pattern turns out to be robust against a number of sensitivity checks. (C) 2014 Elsevier B.V. All rights reserved.