IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Examination of the macroeconomic implicit tax rate on labour derived by the European Commission

Listed author(s):
  • Paolo Acciari

    (European Commission)

  • Peter Heijmans

    (European Commission)

All tax indicator estimates, whether based on aggregate- or micro data, need to be corroborated by other information and preferably also other tax indicators before policy conclusions can reasonably be drawn. The purpose of this paper is to describe the way the (macroeconomic implicit tax rate on labour income is calculated in the European Commission Structures of the Taxation Systems in the EU? publication, to show its relationship to the widely recognised (microeconomic) tax wedge indicator for an average production worker from the "Taxing Wages" approach of the OECD, and to illustrate its use. It appears from the European Commission report that evidence from the implicit tax ratio at the macro level in a single year cannot simply be projected to observations for an average worker at the micro level, and conversely. With a few exemptions, however, both the macroeconomic and the microeconomic indicator appear to have comparable informative content as regards to general increasing or decreasing trends over time. It should be noted that the changes in the macroeconomic implicit tax rate may reflect structural changes in the entire economy, such as changes in the distribution of wage income. The implicit tax rate relates to actual tax revenue data and it could be, for example, that the revenue effect of targeted reductions in personal income tax, at say, the lower end of the income scale, has been offset by increases in wage income at the top of the wage scale. The two indicators could then be considered complementary instruments for evaluating tax policy.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: final version, 2004
Download Restriction: no

Paper provided by Directorate General Taxation and Customs Union, European Commission in its series Taxation Papers with number 4.

in new window

Length: 32 pages
Date of creation: Dec 2004
Date of revision: Dec 2004
Handle: RePEc:tax:taxpap:0004
Contact details of provider: Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:tax:taxpap:0004. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gaetan Nicodeme)

or (Valeska Gronert)

or (Astrid Van Mierlo)

or (Gaelle Garnier)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.