Computing Effective Tax Rates on Factor Incomes and Consumption: An International Macroeconomic Perspective

Enrique Mendoza, Assaf Razin and Linda Tesar

No 866, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper proposes a methodology for computing effective average tax rates using national accounts and revenue statistics, and applies it to construct time-series of tax rates for the seven largest industrialized countries. The resulting tax rates are consistent with available estimates of marginal tax rates, and with basic principles linking tax rates to savings, investment, and labour supply in neoclassical models, and to the rate of unemployment in job search models. These results suggest that the proposed tax rates are useful approximations to those faced by economic agents in models based on optimizing behaviour.

Keywords: Capital Income Tax; Consumption Tax; International Tax Policy; Investment; Labour Income Tax; Labour Supply; Savings (search for similar items in EconPapers)
JEL-codes: E62 F41 H2 H3 H87 (search for similar items in EconPapers)
Date: 1994-01
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Citations: View citations in EconPapers (3)

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