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Income Taxation Across Countries

Author

Listed:
  • Qiu, Xincheng

    (Peking University)

  • Russo, Nicolo

    (Goethe University Frankfurt)

Abstract

This paper examines income tax systems in over thirty countries over the past forty years using microdata from the Luxembourg Income Study. We show that income tax systems worldwide are well approximated by a two-parameter log-linear effective tax function. We provide country- and year-specific estimates and document several insights. First, higher average tax rates are associated with higher progressivity. Second, richer countries have more progressive tax systems. Third, progressivity varies by family structure, with marriage and children associated with higher progressivity. Finally, transfers play an important role in redistribution, making the overall tax-and-transfer function more progressive than the tax function.

Suggested Citation

  • Qiu, Xincheng & Russo, Nicolo, 2025. "Income Taxation Across Countries," IZA Discussion Papers 18190, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18190
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    Keywords

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    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
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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