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Tax Design in the OECD: A test of the Hines-Summers Hypothesis

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  • Furceri, Davide
  • Karras, Georgios

Abstract

This paper investigates the effects of economic size and trade openness on tax design in the OECD. Using data for thirty OECD countries over the 1965-2007 period, we test the recently proposed Hines-Summers [2009] Hypothesis, according to which the smaller the size and the greater the openness of the economy, the more it will rely on expenditure taxes and the less on income taxes. Our findings show that the Hines-Summers Hypothesis can claim broad, statistically significant, and robust empirical support in the OECD data sets we examined.

Suggested Citation

  • Furceri, Davide & Karras, Georgios, 2010. "Tax Design in the OECD: A test of the Hines-Summers Hypothesis," MPRA Paper 23358, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:23358
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    References listed on IDEAS

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    More about this item

    Keywords

    Income tax; Consumption tax; Country size; Trade openness;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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