Corporate flat tax reforms and businesses' location choices : evidence from Switzerland

  • Galletta, Sergio Istituto di economia politica (IdEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera
  • Redonda, Agustin Council on Economic Policies (CEP), Zürich, Switzerland

32 p.

English Profit taxation affects corporate investment decisions through several channels. This paper focuses on the impact of corporate income flat tax reforms on businesses' location choices. Since 1990, Swiss states (cantons) have been switching from a graduated to a flat tax rate scheme on profits. The paper assesses the effects of such a reform on the number of establishments by computing a difference-in-differences estimation. Our results show a negative impact on the number of firms in a given jurisdiction. Interestingly, the effect is considerably larger for riskier firms, suggesting the presence of an insurance effect from progressive taxation for risk- averse entrepreneurs.
  • English
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  • RERO DOC 258143
  • ARK ark:/12658/srd1318658
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