The Resource Understanding multidimensional tax systems

Understanding multidimensional tax systems

Understanding multidimensional tax systems
Understanding multidimensional tax systems
Income tax systems are multidimensional, and ignoring their non-rate aspects can introduce bias into cross-country empirical estimation of the impact of taxation on economic outcomes. The authors analyse 10 non-rate tax system aspects, codified based on recent reports published by the Organisation for Co-operation and Development. They find that a single factor (which they call Dispersed Responsibility), related to the role of taxpayers and third parties in tax collection, can reasonably summarize the cross-country covariation, and offer it as a parsimonious measure of non-rate tax system dimensions for future empirical analysis. They also ascertain that a standard measure of trust in government is positively associated with greater administrator coverage and administrative assessment, as well as more serious sanctions for noncompliance. Ethnic heterogeneity, individualism, and a history of external conflict also can explain certain aspects of tax systems. The authors find that countries with greater trust in government score lower on Dispersed Responsibility. Finally, they find that adding a measure of the number of tax authority employees can eliminate the otherwise significant positive estimated coefficient of GDP per capita on the tax level, and attracts a significant positive correlation itself, suggesting that the extent of tax administration and enforcement is part of the story that explains the enduring statistical regularity between tax levels and per capita income
Citation source
In: International tax and public finance. - Norwell. - Vol. 19 (2012), no. 2 ; p. 237-267
  • Robinson, L.A
  • Slemrod, J
Geographic coverage
Language note
  • tax system
  • economic development
  • collection of tax
  • enforcement
Understanding multidimensional tax systems
Understanding multidimensional tax systems

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