A Comparative Analysis of the Structure of Tax Systems in Industrial Countries

IMF Working Papers, February 1, 1993

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A Comparative Analysis of the Structure of Tax Systems in Industrial Countries

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Bibliographic details

• Authors: Assaf Razin, Enrique G. Mendoza, Linda L. Tesa
• Published: February 1, 1993
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451843040.001

Methodology for Effective Average Tax Rates

• Describes a methodology for computing effective average tax rates on factor incomes and consumption using OECD data from national accounts and revenue statistics.
• Constructs time series of tax rates for the group of seven largest industrialized countries.
• Compares the constructed effective average tax rates with estimates of effective marginal tax rates obtained in other studies.

Empirical construction and comparisons

• Uses national accounts and revenue statistics from OECD sources to derive tax-rate time series.
• Provides direct comparisons between effective average tax rates and effective marginal tax rates from prior literature.
• Presents stylized facts that distinguish tax systems across countries based on the constructed series.

Stylized facts and cross-country distinctions

• Documents distinguishing features of tax systems across the sampled industrial countries.
• Highlights differences in tax structure across factor incomes and consumption as captured by the effective average tax rates.

Co-movements with macroeconomic variables

• Examines co-movements between the tax rates and:
  • savings
  • investment
  • net exports
  • unemployment
  • hours worked

Implications for policy and macroeconomic modeling

• Analysis illustrates some of the potential implications of tax policies currently under consideration.
• Suggests that the proposed effective average tax rates are useful approximations to those faced by representative agents in dynamic macroeconomic models.

Keywords and topical focus

• Core subjects: Average effective tax rate, Capital income tax, Consumption taxes, Income tax systems, Personal income tax, Tax policy, Taxes.
• Keywords used in the analysis include: Average effective tax rate, Capital income tax, capital tax rate, Consumption taxes, factor income, income tax, Income tax systems, labor income, Labor income tax tax rate, North America, Personal income tax, personal income tax rate, physical capital, rate of return, revenue data, statutory tax, statutory tax rates, tax income, tax rate, time series, trade balance, WP.

A Comparative Analysis of the Structure of Tax Systems in Industrial Countries (IMF Working Paper by Assaf Razin, Enrique G. Mendoza, and Linda L. Tesa, February 1, 1993).