Data and Code for: Who Bears the Burden of Local Taxes?

We study the distributional effects of local taxes and find them to be strikingly progressive. We calibrate a structural model of a multi-municipality local labor market with new reduced-form elasticity estimates. Households with children are found to be considerably less mobile than households without children and to have moderately stronger preferences for locally provided public goods. Combined with capitalization of taxes into housing prices and non-homothetic housing demand, this implies that the incidence of local income taxes mainly falls on above-median income childless households. Local income taxes, even if flat-rate, turn out to be more progressive than property taxes.<br>