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2014-07

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Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/119526

Business taxes and the electoral cycle

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Abstract

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.

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Eleccions locals, Impostos, Política econòmica

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Local elections, Taxation, Economic policy

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Articles publicats en revistes (Economia)

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FOREMNY, Dirk and RIEDEL, Nadine. Business taxes and the electoral cycle. Journal of Public Economics. 2014. Vol. 115, num. July, pags. 48-61. ISSN 0047-2727. [consulted: 7 of October of 2026]. Available at: https://hdl.handle.net/2445/119526

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