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Global Reform of Personal Income Taxation, 1981-2005: Evidence from 189 Countries

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Abstract

In this paper we use a panel of 189 countries to describe the salient trends that have emerged in national personal income tax systems spanning the twenty five year period from 1981 to 2005. Using complete national income tax schedules with statutory rates, thresholds, country-specific tax formulas and other information, we calculate actual average and marginal tax rates at different income levels as well as time-varying measures of structural progressivity and complexity of national tax systems. Overall, our analysis shows a significant transition from complex, graduated tax schedules that featured multiple tax brackets and stair stepped tax rates to simpler, flatter tax schedules distinguished by fewer tax brackets and lower rates. The emerging trend toward flat tax schedules is also highlighted. We show that frequent alterations of tax structures have diminished the overall progressivity and complexity of national tax systems; however, the degree of this change varies considerably by country group.

Suggested Citation

  • Klara Sabirianova Peter & Steve Buttrick & Denvil Duncan, 2007. "Global Reform of Personal Income Taxation, 1981-2005: Evidence from 189 Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0721, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper0721
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    More about this item

    Keywords

    Personal Income Taxation; flat tax; progressivity; national tax system; personal income tax system;
    All these keywords.

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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