Tax System Change and the Impact of Tax Research
AbstractThis paper considers the proposition that recent tax policy trends have been decisively influenced by tax research. In both the OECD countries and developing countries, the two most important changes in tax systems in recent decades have been the introduction of the VAT and the general lowering and flattening of statutory income tax rates. The downward pressure on personal and corporate income tax rates has certainly been supported, if not initiated, by the increasing research measuring the distortions caused by high marginal tax rates. Equally, the widespread adoption of VAT is probably due at least in part to acceptance of the economic argument that this form of sales tax is less economically distorting. For the most part, however, countries have not done these things because economists produced persuasive theories or empirical evidence that it would be good to do them but for their own reasons. After reviewing a number of aspects of how tax policy decisions are made in practice, the paper concludes that if tax scholars are interested in improving policy, they should focus not on the short-term political game within which policy decisions are inevitably made in all countries but rather on the long-term game of building up institutional capacity, both within and outside governments, to articulate relevant ideas for change, to collect and analyze relevant data, and to assess and criticize the effects of such changes as are made. Economic research may provide valuable inputs into policy decisions, both because it is the only approach focusing on efficiency concerns and because it can (but often fails to) say some useful things about the distributional outcomes that impact more immediately on policy decisions in most countries. But it is not and cannot be a substitute for the development of the political institutions that need to exist if ‘good’ tax policy is to be developed and implemented.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper 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 paper1013.
Length: 48 pages
Date of creation: 01 May 2010
Date of revision:
Contact details of provider:
Web page: http://aysps.gsu.edu/isp/index.html
tax policy; tax research; developing countries; administratin; political economy;
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-03-05 (Accounting & Auditing)
- NEP-ALL-2011-03-05 (All new papers)
- NEP-PBE-2011-03-05 (Public Economics)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paul Benson).
If references are entirely missing, you can add them using this form.