On the Political Economics of Tax Reforms: survey and empirical assessment

Micael Castanheira, Gaëtan Nicodème and Paola Profeta

Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS from Condorcet Center for political Economy

Abstract: Political constraints and incentives are the true driver of tax reforms. This paper reviews the political economics literature on personal income tax systems and reforms to see how political mechanisms help explain tax reforms. We take some of the implications of these theories to the data using LABREF, a database that identifies labor tax reforms in the European Union for the period 2000-2007, and control for economic and labor market factors. We find that political variables carry more weight than economic variables, and we show empirical regularities that support political economy theories. We also find that governments tended to reform more in better economic times, engaging in pro-cyclical behavior.

Keywords: political economy; taxation; personal income tax; LABREF (search for similar items in EconPapers)
JEL-codes: H11 H21 H24 P16 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-acc, nep-pbe, nep-pol and nep-pub
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Citations: View citations in EconPapers (36)

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Related works:
Journal Article: On the political economics of tax reforms: survey and empirical assessment (2012)
Working Paper: On the Political Economics of Tax Reforms: survey and empirical assessment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:tut:cccrwp:2012-08-ccr

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