Fiscal Federalism

Universität Basel, Spring 2023
Master in Wirtschaftswissenschaften
Prof. Dr. Kurt Schmidheiny

General Information:

• Syllabus
• Slides Introduction: 4up, 1up

Assigned Readings for Discussion in Class:

• April 25, 2023: Tiebout (1956). Reading task: 1-up, 2-up.
• May 2, 2023: Epple and Romer (1991). Reading task: 1-up, 2-up.
• May 9, 2023: Hansen and Kessler (2001). Reading task: 1-up, 2-up.
• May 16, 2023: Textbook, chapter 29, pp. 487-495. Reading task: 1-up, 2-up.
• May 23, 2023: Tørsløv, Wier, and Zucman (2023). Reading task: 1-up, 2-up.

Text Book

• Richard W. Tresch (2015), Public Finance: A Normative Theory, 3rd edition, Amsterdam: Elsevier. Available as e-book within the University network: https://www.sciencedirect.com/science/book/9780124158344

1. Facts on Fiscal Decentralization in Switzerland and around the World

• Blöchliger, Hansjörg and Josette Rabesona (2009), The Fiscal Autonomy of Sub-Central Governments: An Update. OECD Working Papers on Fiscal Federalism, 9.
• OECD Fiscal Decentralisation Database. Available online at: https://www.oecd.org/tax/fiscal-decentralisation-database.htm
• Marius Brülhart, Sam Bucovetsky and Kurt Schmidheiny (2014), Taxes in Cities. In: G. Duranton, J.V. Henderson and W. Strange (eds), Handbook of Regional and Urban Economics, Volume 5.
• Kurt Schmidheiny (2017), Emerging Lessons from Half a Century of Fiscal Federalism in Switzerland. Swiss Journal of Economics and Statistics, 153(2).
• Studie für Handelskammer beider Basel (HKBB): Publikation der HKBB 2021, Studie 2020.
• Interactive Graphs (link via secure area): cantons, Zurich.

2. Local Public Goods

• Tiebout, C. (1956), A pure theory of local expenditures. Journal of Political Economy, 64, pp. 416–424.
• Bewley, T. F. (1981), A Critique of Tiebout's Theory of Local Public Expenditures. Econometrica, 49(3), pp. 713-740.
• Boadway, R., Tremblay, J.-F. (2012), Reassessment of the Tiebout model. Journal of Public Economics, 96, pp. 1063–1078.
• Banzhaf, H. Spencer, and Randall P. Walsh (2008), Do People Vote with Their Feet? An Empirical Test of Tiebout’s Mechanism. American Economic Review 98(3), 843–863.
• Oates, Wallace E. (2006), The Many Faces of the Tiebout Model. In: The Tiebout Model at Fifty: Essays in Public Economics in Honor of Wallace Oates, edited by William A.Fischel, Cambridge, MA, Lincoln Institute of Land Policy.
• Oates, Wallace E. (1999), An Essay on Fiscal Federalism. Journal of Economic Literature, 37, pp. 1120-1149.

3. Urban Sorting

• Epple, Dennis, Romer, Thomas (1991), Mobility and redistribution. Journal of Political Economy, 99, 828–858.
• Epple, D., Platt, G.J. (1998), Equilibrium and local redistribution in an urban economy when households differ in both preferences and income. Journal of Urban Economics, 43, 23–51.
• Epple, D., Sieg, H. (1999), Estimating Equilibrium Models of Local Jurisdictions. Journal of Political Economy, 107, 645-681.
• Calabrese, S., Epple, D., Romano, R. (2012), Inefficiencies from metropolitan political and fiscal decentralization: failures of Tiebout competition. Review of Economic Studies 79 (3), 1081–1111.

4. Urban Sorting and Voting

• Hansen, Nico A., Kessler, Anke S. (2001), The political geography of Tax H(e)avens and Tax Hells. American Economic Review, 91, 1103–1115.
• Schmidheiny, Kurt (2006), Income segregation from local income taxation when households differ in both preferences and incomes. Regional Science and Urban Economics, 36(2), 270–299.
• Kurt Schmidheiny (2006), Income Segregation and Local Progressive Taxation: Empirical Evidence from Switzerland. Journal of Public Economics, 90(3), 429-458.
• Florian Kuhlmey and Beat Hintermann (2019), The welfare costs of Tiebout sorting with true public goods. International Tax and Public Finance, 26, 1166–1210 .
• Kuminoff, Nicolai V., V. Kerry Smith, and Christopher Timmins (2013), The New Economics of Equilibrium Sorting and Policy Evaluation Using Housing Markets. Journal of Economic Literature, 51(4), 1007–1062.

5. Tax Competition

• Richard W. Tresch (2015), Public Finance: A Normative Theory, 3rd edition, Amsterdam: Elsevier. Chapter 29, pp. 487-495. Version with marked typos.
• Sam Bucovetsky (1991), Asymmetric Tax Competition. Journal of Urban Economics, 30, 167-181.
• Marius Brülhart, Sam Bucovetsky and Kurt Schmidheiny (2014), Taxes in Cities. In: G. Duranton, J.V. Henderson and W. Strange (eds), Handbook of Regional and Urban Economics, Volume 5.
• Michael Keen and Kai A. Konrad (2013), The Theory of International Tax Competition and Coordination. In: Alan J. Auerbach, Raj Chetty, Martin Feldstein and Emmanuel Saez (eds.), Handbook of Public Economics, Vol. 5, Elsevier.

6. International Profit Taxation

• Thomas Tørsløv, Ludvig Wier, and Gabriel Zucman (2023), The Missing Profits of Nations, Reivew of Economic Studies, 90 (3), May 2023, 1499-1534. Project website with data.
• Dhammika Dharmapala and Nadine Riedel (2013), Earnings shocks and tax-motivated income-shifting: Evidence from European multinationals. Journal of Public Economics, 97, 95-107.
• Richard W. Tresch (2015), Public Finance: A Normative Theory, 3rd edition, Amsterdam: Elsevier. Chapter 29, pp. 495-500.
• OECD, BEPS 2015 Final Reports. Available online at: http://www.oecd.org/tax/beps-2015-final-reports.htm
• Clemens Fuest, Felix Hugger, Florian Neumeier (2022) , Die Aufkommenseffekte einer globalen effektiven Mindeststeuer, ifo Schnelldienst, 2022, 75, Nr. 04, 41-49.
• Clemens Fuest, Felix Hugger, Florian Neumeier (2022) , Grenzüberschreitende Geschäftsbeziehungen innerhalb von Unternehmensgruppen – Ausmaß und Reformoptionen, Studie im Auftrag des Bundesministeriums der Finanzen.
• OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD Publishing, Paris.