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Do political incentives matter for tax policies? Ideology, opportunism and the tax structure

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  • Konstantinos Angelopoulos
  • George Economides
  • Pantelis Kammas

Abstract

This paper investigates the importance of political ideology and opportunism in the choice of the tax structure. In particular, we examine the effects of cabinet ideology and elections on the distribution of the tax burden across factors of production and consumption for 21 OECD countries over the period 1970-2000 by employing four alternative cabinet ideology measures and by using the methodology of effective tax rates. There is evidence of both opportunistic and partisan effects on tax policies. More precisely, we find that left-wing governments rely more on capital relative to labor income taxation and that they tend to increase consumption taxes. Moreover, we find that income tax rates (but not consumption taxes) tend to be reduced in pre-electoral periods and that capital effective tax rates (defined broadly to include taxes on self-employed income) are reduced by more than effective labor tax rates.

Suggested Citation

  • Konstantinos Angelopoulos & George Economides & Pantelis Kammas, 2009. "Do political incentives matter for tax policies? Ideology, opportunism and the tax structure," Working Papers 2009_12, Business School - Economics, University of Glasgow.
  • Handle: RePEc:gla:glaewp:2009_12
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    References listed on IDEAS

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    Cited by:

    1. Víctor Mauricio Castañeda, 2016. "Las crisis económicas y el escenario político en la introducción de reformas tributarias. La experiencia argentina (1980-2010) y una constatación para Latinoamérica," REVISTA CUADERNOS DE ECONOMÍA, UN - RCE - CID, pages 173-206.

    More about this item

    Keywords

    tax structure; political economy; partisan and opportunistic effects;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H1 - Public Economics - - Structure and Scope of Government

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