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Computing Effective Tax Rates on Factor Incomes and Consumption: An International Macroeconomic Perspective

Author

Listed:
  • Mendoza, Enrique G
  • Razin, Assaf
  • Tesar, Linda

Abstract

This paper proposes a methodology for computing effective average tax rates using national accounts and revenue statistics, and applies it to construct time-series of tax rates for the seven largest industrialized countries. The resulting tax rates are consistent with available estimates of marginal tax rates, and with basic principles linking tax rates to savings, investment, and labour supply in neoclassical models, and to the rate of unemployment in job search models. These results suggest that the proposed tax rates are useful approximations to those faced by economic agents in models based on optimizing behaviour.

Suggested Citation

  • Mendoza, Enrique G & Razin, Assaf & Tesar, Linda, 1994. "Computing Effective Tax Rates on Factor Incomes and Consumption: An International Macroeconomic Perspective," CEPR Discussion Papers 866, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:866
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    Citations

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    Cited by:

    1. Nicodeme, Gaetan, 2001. "Computing effective corporate tax rates: comparisons and results," MPRA Paper 3808, University Library of Munich, Germany.
    2. Gaëtan Nicodème, 2002. "Sector and size effects on effective corporate taxation," European Economy - Economic Papers 2008 - 2015 175, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

    More about this item

    Keywords

    Capital Income Tax; Consumption Tax; International Tax Policy; Investment; Labour Income Tax; Labour Supply; Savings;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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