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Does cabinet ideology matter for the structure of tax policies?

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  • Angelopoulos, Konstantinos
  • Economides, George
  • Kammas, Pantelis

Abstract

This paper investigates the importance of political ideology for the choice of the tax structure. In particular, we examine the effects of cabinet ideology on the distribution of the tax burden across factors of production and consumption for 16 OECD countries over the period 1970–2000 by employing four alternative cabinet ideology measures and by using the methodology of effective tax rates. There is evidence of partisan effects on tax policies. In particular, we find that left-wing governments rely more on capital relative to labor income taxation and that they tend to increase consumption taxes. The latter result suggests that left-wing governments may exploit a type of fiscal illusion on the part of taxpayers in order to obtain political benefit.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 28 (2012)
Issue (Month): 4 ()
Pages: 620-635

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Handle: RePEc:eee:poleco:v:28:y:2012:i:4:p:620-635

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Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Tax structure; Political economy; Partisan effects;

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Cited by:
  1. Osterloh, Steffen & Heinemann, Friedrich, 2008. "The Political Economy of Corporate Tax Harmonization: Why Do European Politicians (Dis)like Minimum Tax Rates?," ZEW Discussion Papers 08-108, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. François Facchini & Mickaël Melki, 2011. "Optimal Government Size and Economic Growth in France (1871-2008): An explanation by the State and Market Failures," Documents de travail du Centre d'Economie de la Sorbonne 11077, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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