Optimal local taxation and French municipal tax distortions

Marie-Estelle Binet (1)

1 CREM - Centre de recherche en économie et management

This article presents both theoretical and empirical findings in the field of optimal local taxation i.e. neutral in locational decision. This topic should throw light on the question of tax policy and tax reform. We extend Wildasin's (1987) model, including mobile capital. In this way, we include his marginal cost of congestion taxation rule relating to mobile households (Proposition 1). This extension provides us with a new rule (Proposition 2): the optimal share-out of taxes among household residents and firms in municipalities. To illustrate these results, we discuss the French municipal tax system properties and we pick out its main distortions.

Mots clés: local public economy; optimal taxation

Domaines: Economies et finances

Marie-Estelle Binet. Optimal local taxation and French municipal tax distortions. Applied Economics, 2008, 40 (3), pp.327 - 332. ⟨10.1080/00036840500427874⟩. ⟨halshs-00257367⟩