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Measuring Tax Burdens in Europe

Author

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  • Guntram B. Wolff

Abstract

This paper calculates effective macro-economic tax rates for the 25 EU countries following the methodology developed in Mendoza, Razin, and Tesar (1994). The available Eurostat data allow to compute the tax wedge on consumption, labor and capital. We show that effective tax rates in the 10 new member states of the EU are on average 10 percentage points lower on labor, and 5 percentage points lower on capital and consumption. There is no tendency of convergence in effective tax burdens on capital. The newly computed tax rates are in line with the effective tax rates of the EU Commission for EU 15. Effective tax rates on capital are only weakly connected to statutory tax rates on corporate income. As they are calculated from macroeconomic data they provide only limited information on the actual tax burdens of individual corporations or households.
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Suggested Citation

  • Guntram B. Wolff, 2006. "Measuring Tax Burdens in Europe," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 61(03), pages 299-328, September.
    • Handle: RePEc:usg:auswrt:2006:61:03:299-328
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/auswrt/AW_61-03__03_Wolff.pdf
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    Cited by:

    1. Guntram Wolff, 2007. "Foreign Direct Investment in the Enlarged EU: Do Taxes Matter and to What Extent?," Open Economies Review, Springer, vol. 18(3), pages 327-346, July.
    2. Süreyya Yilmaz Ozekenci & Cansu Unver Erbas & Suzan Dsouza, 2025. "ESG Resilience Amid Financial Distress: the Role of Board Gender Diversity in EU Firms," Prague Economic Papers, Prague University of Economics and Business, vol. 2025(4), pages 470-494.
    3. Jan Tecl, 2018. "Measurement of Labour Taxation," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2018(1), pages 5-18.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • 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

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