Working Papers in Economics
No 345:
Why do you want lower taxes? Preferences regarding municipal income tax rates
Niklas Jakobsson ()
Abstract: The factors shaping people’s preferences for municipal
labour income tax rates in Sweden were assessed, using survey data. The tax
rate actually faced by the respondents had explanatory power for their
attitudes towards the tax rate only when a few socio-demographic
explanatory variables were included. When a richer set of variables were
included the association disappears. The hypothesis that this small or
nonexistent effect from the actual tax rate is caused by a Tiebout bias
finds no support, but IV-estimations indicate that the actual municipal tax
rate may be of importance for the attitudes towards the tax rate. People
with higher education, regularly reading a newspaper, agreeing with the
political left, and stating that they were satisfied with the municipal
services were less likely to want to decrease the municipal tax. People
with low income, stated low knowledge about society, and agreeing with the
political right were instead more likely wanting to decrease the municipal
tax.
Keywords: tax preferences; attitudes; income tax; (follow links to similar papers)
JEL-Codes: H24; (follow links to similar papers)
23 pages, February 23, 2009
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