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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.

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File URL: http://icepp.gsu.edu/sites/default/files/documents/icepp/wp/ispwp0721.pdf
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Bibliographic Info

Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper0721.

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Length: 46 pages
Date of creation: 01 Dec 2007
Date of revision:
Handle: RePEc:ays:ispwps:paper0721

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Fax: 404-413-0244
Web page: http://aysps.gsu.edu/isp/index.html

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Keywords: Personal Income Taxation; flat tax; progressivity; national tax system; personal income tax system;

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References

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Citations

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Cited by:
  1. Isabelle Joumard & Mauro Pisu & Debbie Bloch, 2012. "Tackling income inequality: The role of taxes and transfers," OECD Journal: Economic Studies, OECD Publishing, vol. 2012(1), pages 37-70.
  2. Philipp Doerrenberg & Denvil Duncan & Clemens Fuest & Andreas Peichl, 2012. "Nice Guys Finish Last: Are People with Higher Tax Morale Taxed more Heavily?," CESifo Working Paper Series 3858, CESifo Group Munich.
  3. Yongzheng Liu & Jorge Martinez-Vazquez, 2010. "The Growth-Inequality Tradeo in the Design of Tax Structure: Evidence from a Large Panel of Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1320, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  4. Duncan, Denvil & Peter, Klara Sabirianova, 2012. "Unequal Inequalities: Do Progressive Taxes Reduce Income Inequality?," IZA Discussion Papers 6910, Institute for the Study of Labor (IZA).
  5. Wayne Thirsk, 2008. "Tax Policy in Pakistan: An Assessment of Major Taxes and Options for Reform," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0808, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  6. Peter Egger & Doina Radulescu & Nora Strecker, 2013. "Effective labor taxation and the international location of headquarters," International Tax and Public Finance, Springer, vol. 20(4), pages 631-652, August.
  7. Joan Esteban & Laura Mayoral, 2013. "A Politico-Economic Model of Public Expenditure and Income Taxation," Working Papers 743, Barcelona Graduate School of Economics.
  8. Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española, IEF, vol. 200(1), pages 95-130, March.
  9. Philipp Doerrenberg & Andreas Peichl, 2012. "The Impact of Redistributive Policies on Inequality in OECD Countries," Cologne Graduate School Working Paper Series 03-05, Cologne Graduate School in Management, Economics and Social Sciences.
  10. Tomasz Wołowiec & Janusz Soboń, 2011. "EU Integration and Harmonisation of Personal Income Taxation," Contemporary Economics, University of Finance and Management in Warsaw, vol. 5(1), March.
  11. John Creedy, 2009. "The Personal Income Tax Structure: Theory and Policy," Department of Economics - Working Papers Series 1063, The University of Melbourne.
  12. Peter, Klara Sabirianova, 2009. "Income Tax Flattening: Does It Help to Reduce the Shadow Economy?," IZA Discussion Papers 4223, Institute for the Study of Labor (IZA).

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