Do the Rich Pay Their Taxes Early?

46 Pages Posted: 12 Dec 2017

See all articles by Andreas M. Fischer

Andreas M. Fischer

Swiss National Bank; Centre for Economic Policy Research (CEPR)

Lucca Zachmann

Swiss National Bank

Date Written: December 2017


This paper examines the distributional effects of interest credits from early tax payments on average household income at the municipality level. The hypothesis that households from high-income municipalities pay their income taxes early is tested in a demand specification for interest credit for early tax payments. The empirical analysis considers regional data from 170 municipalities in the canton of Zurich from 2007 to 2013. The income elasticity of interest credit for early tax payments is estimated to be near unity for the top 5th percentile of average household income, whereas the same elasticity is below one-half for the lower 95th percentile and is statistically insignificant. The finding that high-income households pay their taxes early supports the view that the rich are not liquidity constrained. Early tax payments make the tax system more regressive for high-income households.

Keywords: demand for interest credit on early tax payment, early tax payment

JEL Classification: D14, D30, E21, E41, H31

Suggested Citation

Fischer, Andreas M. and Zachmann, Lucca, Do the Rich Pay Their Taxes Early? (December 2017). CEPR Discussion Paper No. DP12491, Available at SSRN:

Andreas M. Fischer (Contact Author)

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
+41 1 631 3294 (Phone)
+41 1 631 3901 (Fax)

Centre for Economic Policy Research (CEPR)

United Kingdom

Lucca Zachmann

Swiss National Bank

Fraumuensterstr. 8
Zuerich, 8022

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