To assemble to resemble? A study of tax disparities among French municipalities
Paper number: 11/04
Paper Category: Discussion Paper
Marie-Laure Breuillé Pascale Duran-Vigneron & Anne-Laure Samson
The purpose of this paper is to analyze the e¤ect of inter-municipal cooper- ation on local taxation. Municipalities that join/create an inter-municipal juris- diction choose between three tax regimes, which may induce both horizontal and vertical tax externalities. Using the di¤erences in di¤erences method with a quasi- exhaustive panel for French municipalities over the 1994-2010 period, we show a positive causal e¤ect of cooperation on the level of cumulative tax rates (i.e. the sum of municipal and inter-municipal tax rates). In addition, we show that cooper- ation leads to a convergence of tax rates within an inter-municipal structure, which thus reduces tax disparities among municipalities.