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Evolution of Fiscal Systems: Convergence or Divergence?

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  • Paloma Péligry
  • Xavier Ragot

Abstract

We analyze the convergence or divergence of the diversity of fiscal systems after the financial crisis of 2007. Studying 29 countries, we first document the evolution of the taxation of households, firms, labour, consumption and capital. We identify three types of fiscal systems: liberal, intermediate and high-redistribution, which can be ranked in ascending order of tax rates, confirming known typologies in the diversity of capitalism literature. Only the tax rate on corporate profits shows signs of downward convergence over the period. The other tax rates show rather signs of divergence. Second, a divergence is observed among the liberal and high-redistribution group over the period. The European countries are converging towards the high-redistribution model, with the exception of Great Britain, which is moving towards the liberal model. Thus, the financial crisis seems to contribute not to the convergence, but to the divergence of fiscal systems.

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  • Paloma Péligry & Xavier Ragot, 2025. "Evolution of Fiscal Systems: Convergence or Divergence?," LIS Working papers 895, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:895
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    More about this item

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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