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Personal income tax mimicry: evidence from international panel data

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Abstract

This paper investigates personal income tax (PIT) mimicry at the international level. It is the first to empirically investigate the extent to which PIT mimicry varies along the tax schedule and the first to include nations which are not part of the OECD. We use data on international personal income tax schedules from the world tax indicators to estimate marginal and average tax rates at various multiples of per capita gross domestic product (GDP). These tax rates are then used to estimate the extent to which countries respond to their neighbors’ PIT policy. We find evidence of PIT mimicry using a balanced panel of 53 countries over 24 years. This finding is strongest for tax rates at lower multiples of per capita GDP and survives several robustness checks. Copyright Springer Science+Business Media New York 2014

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  • Denvil Duncan & Ed Gerrish, 2014. "Personal income tax mimicry: evidence from international panel data," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(1), pages 119-152, February.
    • Handle: RePEc:kap:itaxpf:v:21:y:2014:i:1:p:119-152
    DOI: 10.1007/s10797-012-9261-9
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    1. Joshua C. Hall & Donald J. Lacombe & Timothy M. Shaughnessy, 2015. "Economic Freedom and Economic Growth Across U.S. States: A Spatial Panel Data Analysis," Working Papers 15-33, Department of Economics, West Virginia University.
    2. Sriparna Ghosh & Joshua C. Hall, 2018. "The Political Economy of Soda Taxation," Economics Bulletin, AccessEcon, vol. 38(2), pages 1045-1051.

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    More about this item

    Keywords

    Personal income tax; Average tax rate; Marginal tax rate; Tax mimicry; Tax competition; H24; H25; H87;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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