Analysis of dependence of tax behavior on macroeconomic factors: the case of OECD countries

Sokolovska, Olena and Sokolovskyi, Dmytro (2015): Analysis of dependence of tax behavior on macroeconomic factors: the case of OECD countries.

Abstract

The article deals with investigation of principles, factors and conditions of the government’s tax behavior, notably by means of changing the tax burden. We define da set of potential indicators of the economic efficiency, based on the GDP and normalized in various ways on the level of consumer prices in the country, on per capita data and on per hour worked. By using the statistical analysis techniques we found the statistical dependence between government’s behavior and each of the selected indicators. We argued that the factor of labour of productivity per capita has the biggest impact on the government’s tax decisions. Also we showed that the governments mostly act as satisfiers. The obtained results allow to understand the principles of governments’ decision-making, and, therefore, to forecast in some way their behavior in certain economic conditions. Moreover, it could help to understand the reasons why the “race to the bottom” situation appears. The present paper differs from previous studies both by the topic, studying the relations between government’s tax behavior and economic efficiency of their jurisdictions and by the approach to define this dependence, since the latest can be observed only when each variant of government’s tax reaction is analyzed separately.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic efficiency; corporate tax burden; tax compliance; satisfying behavior; GDP; labour productivity
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C12 - Hypothesis Testing: General; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J38 - Public Policy

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