Abstract
We examine the effects of differences in income tax rates on commuting times. Our theoretical model introduces a border into a model of an urban area and shows that differences in average tax rates distort commuting patterns. Empirically examining multi-state urban areas allows us to exploit tax discontinuities. Tax differentials have large effects on commuting times for affluent households and mobile households. We demonstrate the assumptions under which commute times are a sufficient statistic to measure the welfare effects of tax policies across space. The model and empirical design can be used by economists to study other policy differences.
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