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Local taxation and tax base mobility: Evidence from a business tax reform in France
1 : Groupe d'analyse et de théorie économique
(GATE Lyon Saint-Étienne)
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Website
École Normale Supérieure (ENS) - Lyon, Université Lumière - Lyon II, Université Claude Bernard - Lyon I (UCBL), CNRS : UMR5824, Université Jean Monnet - Saint-Etienne, PRES Université de Lyon
93, chemin des Mouilles 69130 Écully --- 6, rue Basse des Rives 42023 Saint-Étienne cedex 02 -
France
This paper investigates the impact of tax base mobility on local taxation. We first develop a theoretical model in order to examine the connection between local business property taxation and tax base mobility within a metropolitan area. We find that decreasing capital intensity in the tax base increases the business property tax rates unambiguously. We then test this result using a French reform, which changes the composition of the main local business tax base in 2010. Estimations using Difference- in-Difference show that the reduction in the mobility of the tax base indeed results in higher business property tax rates. Housing tax rates were not affected by the reform.
