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On the Political Economics of Tax Reforms: survey and empirical assessment

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  • Micael Castanheira De Moura
  • Gaëtan Nicodème
  • Paola Profeta

Abstract

Political constraints and incentives are the true driver of tax reforms. Thispaper reviews the political economics literature on personal income tax systems andreforms to see how political mechanisms help explain tax reforms. We take some ofthe implications of these theories to the data using LABREF, a database that identifieslabor tax reforms in the European Union for the period 2000–2007, and control foreconomic and labor market factors.We find that political variables carry more weightthan economic variables, and we show empirical regularities that support politicaleconomy theories. We also find that governments tended to reform more in bettereconomic times, engaging in pro-cyclical behavior

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/136798.

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Date of creation: 01 May 2012
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Publication status: Published in: International tax and public finance (2012) v.19 n° 4,p.1-27
Handle: RePEc:ulb:ulbeco:2013/136798

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Keywords: Political economy · Taxation · Personal income tax · LABREF;

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Citations

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Cited by:
  1. Micael Castanheira & Gaëtan Nicodème & Paola Profeta, 2012. "On the political economics of tax reforms: survey and empirical assessment," International Tax and Public Finance, Springer, vol. 19(4), pages 598-624, August.
  2. Larisa Lubarova & Oleg Petrushin & Artur Radziwill, 2000. "Is Moldova Ready to Grow? Assessment of Post-crisis Policies (1999-2000)," CASE Network Studies and Analyses 0220, CASE-Center for Social and Economic Research.
  3. Andreas Bernecker, 2014. "Divided We Reform? Evidence from US Welfare Policies," CESifo Working Paper Series 4564, CESifo Group Munich.
  4. European Commission, 2010. "Tax Policy after the Crisis: Monitoring Tax Revenues and Tax Reforms in EU Member States 2010 Report," Taxation Papers 24, Directorate General Taxation and Customs Union, European Commission.
  5. European Commission, 2012. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2012 Report," Taxation Papers 34, Directorate General Taxation and Customs Union, European Commission.
  6. Olivier Bargain & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2013. "Comparing Inequality Aversion across Countries When Labor Supply Responses Differ," Working Papers halshs-00805751, HAL.
  7. Lars P. Feld & Christoph A. Schaltegger, 2012. "Die Politische Ökonomik der Besteuerung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13(1-2), pages 116-136, 02.
  8. Doris Prammer, 2011. "Quality of taxation and the crisis: Tax shifts from a growth perspective," Taxation Papers 29, Directorate General Taxation and Customs Union, European Commission.
  9. European Commission, 2011. "Tax Reforms in EU Member States 2011: tax policy challenges for economic growth and fiscal sustainability," Taxation Papers 28, Directorate General Taxation and Customs Union, European Commission.

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