Furceri, Davide and Karras, Georgios (2010): Tax Design in the OECD: A test of the Hines-Summers Hypothesis.
Download (185Kb) | Preview
This paper investigates the effects of economic size and trade openness on tax design in the OECD. Using data for thirty OECD countries over the 1965-2007 period, we test the recently proposed Hines-Summers  Hypothesis, according to which the smaller the size and the greater the openness of the economy, the more it will rely on expenditure taxes and the less on income taxes. Our findings show that the Hines-Summers Hypothesis can claim broad, statistically significant, and robust empirical support in the OECD data sets we examined.
|Item Type:||MPRA Paper|
|Original Title:||Tax Design in the OECD: A test of the Hines-Summers Hypothesis|
|Keywords:||Income tax; Consumption tax; Country size; Trade openness|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E60 - General
|Depositing User:||Davide Furceri|
|Date Deposited:||18. Jun 2010 05:41|
|Last Modified:||13. Feb 2013 02:02|
Brueckner Jan.K. “Strategic interaction among governments,” In: R. Arnott and D. McMillen, Editors, Companion to urban economics, Basil Blackwell, Oxford, .
Devereux, Michael P., Lockwood, Ben and Redoano, Michela. “Do countries compete over corporate tax rates?,” Journal of Public Economics, 92[5-6], 2008, 1210-1235.
Dhillon, Amrita, Perroni, Carlo, Scharf, Kimberley. “Implementing tax coordination”. Journal of Public Economics 72 , 1999, 243-268.
Garrett, Geoffrey. “Capital mobility, trade, and the domestic politics of economic policy.” In: R. Keohane and H. Milner, Editors, Internationalization and Domestic Politics, Cambridge University Press, New York .
____________. Partisan Politics in a Global Economy, Cambridge University Press, New York, 1998a.
____________. “Global markets and national policies: collision course or virtuous circle.” International Organization 52 , 1998b, 787–824
Grubert, Harry. “Tax planning by companies and tax competition by governments: is there evidence of changes in behavior?.” In: J.R. Hines, Jr., Editor, International Taxation and Multinational Activity, University of Chicago Press, Chicago and London 2001, 113–139.
Hines, James R. and Lawrence H. Summers. “How Globalization Affects Tax Design” NBER Working Paper No 14664, 2009. Published in Tax Policy and the Economy, 2009, 23, 123-158.
Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970-2004," Journal of International Economics, 73, 223-250.
OECD, Economic Outlook 84, 2008, n.2.
Peralta, Susana and Tanguy van Ypersele. “Coordination of capital taxation among asymmetric countries,” Regional Science and Urban Economics, 36, 2006, 708-726.
Rodrik, Dani Has Globalization Gone Too Far, Institute for International Economics, Washington, DC, 1996.
Slemrod, Joel “Are corporate tax rates, or countries, converging?,” Journal of Public Economics 88, 2004, 1169–1186.
Swank. “Funding the welfare state: globalization and the taxation of business in advanced market economies”. Political Studies 46, 1998, 671–692.
Swank, Duan and Sven Steinmo, “The new political economy of taxation in advanced capitalist democracies.” American Journal of Political Science, 46, 2006, 642–655. Tanzi, Vito. Taxation in an Integrating World. The Brookings Institution, Washington, D.C., 1995
Wilson, John D. “Mobile labor, multiple tax instruments, and tax competition.” Journal of Urban Economics 38, 1995, 333-356.
____________. “Theories of Tax competition” National Tax Journal, 48, 1999, 817-838.
White, Halbert. “A Heteroskedasticity-Consistent Covariance Matrix Estimator and Direct Test for Heteroskedasticity” Econometrica, 48, 1980, 817-838.
Dhillon, Amitra ; Wooders, Myrna and Ben Zissimos. Tax Competition Reconsidered,” Journal of Public Economic Theory, 9, 2007, 391-423.
Zodrow, George R., Mieszkowski, Peter. “Pigou, Tiebout, property taxation and the underprovision of local public goods.” Journal of Urban Economics 19, 1986, 356-370.