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

Andrew Young School of Policy Studies
National tax journal (Impact Factor: 0.37). 06/2009; DOI: 10.2139/ssrn.1091534
Source: OAI

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.

1 Bookmark
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Profit taxes are widely acknowledged to influence the location of firms’ headquarters. This paper sheds light on the role of aspects of labor taxation for the international location of headquarters. While profit taxes can be avoided in various ways, it is much harder for firms to manipulate the firm-specific labor tax base so that they may be relatively important for firm location. We construct a unique data set of effective labor taxes in 120 countries and use data on the location of 35,206 firms to analyze the impact of labor income tax rates, the progressivity of the income tax schedule, and social security contributions on firms’ decisions where to locate their headquarters. The findings suggest that both a higher progressivity of the tax system and higher (employee- and employer-borne) social security contributions negatively influence a country’s attractiveness for headquarters location. A one percentage point increase in a country’s average labor income tax rate reduces its probability to be chosen as the headquarters location for the average firm by about 0.023 percentage points.
    International Tax and Public Finance 05/2012; · 0.54 Impact Factor
  • [Show abstract] [Hide abstract]
    ABSTRACT: The creation of switching costs for customers is an important aspect of strategic planning in today's competitive environment. These costs enable firms to address variations in customer preferences and competitor influence in attempting to gain their customers' loyalty. Although the recognition of the importance of such switching costs has long existed in a variety of contexts, the conceptualization and measurement of the construct is lacking in clarity and consistency. This study proposes that perceived switching costs (PSC) constitute a higher-order construct made up of six dimensions that reflect the customers' perception of the time, effort, and money involved in the switching process. The study also proposes that each of the six dimensions has a distinctive set of antecedents and outcomes. The test of the model is an empirical study in the Spanish insurance sector. The results confirm the validity of the higher-order formative construct of PSC and provide insights for specific strategies to address the perceptions of various customers with regard to switching costs.
    Industrial Marketing Management - IND MARKET MANAG. 04/2012;
  • [Show abstract] [Hide abstract]
    ABSTRACT: Purpose – First, the purpose of this paper is to present the recent changes in the treatment of tax credits arising from expenses related to environmental protection made by Portuguese individuals. Second, it aims to assess whether the corporate income tax treatment of provisions for environmental expenses is a force for stimulating environmentally conscious investments by firms or, because of the divergence between accounting and tax computation of such expenses, it is a discouraging factor. Design/methodology/approach – The paper is based on the analysis of tax policy choices, in terms of the individual income tax and the corporate income tax, and its potential impact on environmentally related economic decisions. Findings – In the personal income tax area, the severe restrictions applied to some tax credits, due to the Portuguese public finance situation, brought limitations to some environmentally related deductions, but spared the most relevant one, judging by the amount of credit. A positive discrimination was thus granted to this credit. In the area of provisions for environmental expenses, the recently changed Portuguese corporate tax code cannot be seen as environmentally friendly, especially if the accounting recognition of these costs is compared with its tax treatment. Fiscal policy imposed here is a disadvantageous tax regime. Practical implications – The study shows that the tax policy decision makers are sending mixed signals to economic agents. If the environment is a priority for policy makers, then a more coherent tax policy could be devised. Originality/value – The paper can be a relevant contribution for a better assessment of tax policy choices regarding the impact on environmentally related decisions by individuals and firms. The inducements (or penalties) of different polices are highlighted, and policymakers can find a framework for a more rational analysis of policy options.
    Management of Environmental Quality An International Journal 06/2011; 22(4):418-428.

Full-text (3 Sources)

1 Download
Available from