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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/49488
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| Title: | | On the political economics of tax reforms  |
| Authors: | | Castanheira, Micael Nicodème, Gaëtan Profeta, Paola |
| Issue Date: | | 2011 |
| Series/Report no.: | | CESifo working paper: Public Finance 3538 |
| Abstract: | | There is often a gap between the prescriptions of an optimal tax system and actual tax systems, some of which can be neither efficient economically nor efficient at redistributing income. With a focus on personal income taxes, this paper reviews the political economics literature on tax systems and reforms to see whether political mechanisms allow us to better understand why tax systems look the way they look. Finally, we exploit a database of reforms in labour taxation in the European Union to check the determinants of all reforms, on the one hand, and of targeted reforms, on the other hand. The results fit well with political economy theories and show that political variables carry more weight in triggering reforms than economic variables. This shed light on whether and how tax reforms are achievable. It also explains why many reforms that seem economically optimal fail to be implemented. |
| Subjects: | | political economy taxation personal income tax |
| JEL: | | H11 H21 H24 P16 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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