Hi All, 

The latest from the National Bureau of Economic Research (NBER) is that people in larger urban areas with high wages pay more taxes relative to identical workers in low wage cities. According to Professor David Albouy, Federal taxation in these areas additionally lowers employment by 15% and reduces housing values 4% by artificially depressing the true economic value of land.  

Albouy also notes that the higher tax burden in these cities may be linked to political processes. Many of these urban areas are later in the presidential primary process and have little senate representation.   In other words, these cities have less of a voice in Washington DC, so the combination of high incomes and higher taxation has a disproportionate effect on wealth (here). 

Its an interesting paper.  If you want more by Albouy you should check out his publication list. 

Thanks to Paul Caron at the Tax Professor Blog for turning us onto this. 

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