The tax and the mighty: Tax payer concentration lowers local business taxation in German Municipalities
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Philipps-Universität Marburg
Abstract
We analyze the impact of large firms on business tax rates using data from German mu-nicipalities in Hesse in 1998-2005. Results suggest that business tax rates decrease with tax-payers’ concentration, indicating strong local lobbying power of large firms.
Keywords
yardstick competition, tax competition, Germany, large firms, local business taxation