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Global Reform of Personal Income Taxation, 1981-2005: Evidence from 189 Countries

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  • Peter, Klara Sabirianova

    (University of North Carolina, Chapel Hill)

  • Buttrick, Steve

    (Georgia State University)

  • Duncan, Denvil

    (Indiana University)

Abstract

In this paper we use a panel of 189 countries to describe the salient trends that have emerged in national personal income tax systems spanning the twenty five year period from 1981 to 2005. Using complete national income tax schedules, we calculate actual average and marginal tax rates at different income levels as well as time-varying measures of structural progressivity and complexity of national tax systems. We show that frequent alterations of tax structures have reduced tax rates at higher levels of income and diminished the overall progressivity and complexity of national tax systems; however, the degree of this change varies considerably across countries. We also find that the relationship between the tax rates and revenue is positive for high income countries; however, the strength of the relationship declines with weaker institutions and lower levels of economic development.

Suggested Citation

  • Peter, Klara Sabirianova & Buttrick, Steve & Duncan, Denvil, 2009. "Global Reform of Personal Income Taxation, 1981-2005: Evidence from 189 Countries," IZA Discussion Papers 4228, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4228
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    More about this item

    Keywords

    personal income tax; marginal rate; average rate; tax complexity; progressivity; flat tax; revenue; global trends;
    All these keywords.

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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