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Is the tax burden fairly distributed by developed nations? – a comparative study
Abstract
Background: Globalisation and fast growth in some developing economies significantly reduced the income gap between countries. However, globalisation has not necessarily resulted in equal distribution of benefits inside these countries. Objective: The objective of this research was to verify whether there is a pattern in tax burden distribution policies in highly developed nations. Method: The article adopted the literature review and a comparative data study as research methods and was structured in five chapters that complement each other within a logical sequence. Results: The research showed that despite the development process presupposing sustainability and social inclusion, the developed nations do not equitably distribute the tax burden. The findings also demonstrated that there is no pattern in the tax policies. Conclusions: The comparative analysis indicated that jurisdictions are exempting corporate income taxation to become more competitive in a global economy setting and are overtaxing individual income tax and employee taxation to compensate for the low tax on corporate income. Contributions: The research results contribute to a growing body of literature that explores the relationship between the development of nations and levels of inequality and addresses the role of tax policies in this interrelationship. The research also presents practical contribution, being able to guide the formulation of tax policies that seek tax justice and aim at global tax governance.
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Purpose of the study: The aim of this study is to demonstrate why metagovernance is not effective in increasing the democratic legitimacy of networks; to this end, an articulated map will be presented to describe how interactions occur within metagoverned environments. Methodology/approach: To construct the macro-model of analysis, the methodology of Quivy and Campenhoudt (2005) was used. To consolidate the knowledge involved in the theoretical approach, the Knowledge Development Process-Constructivist (Proknow-C) method by Ensslin, Dutra and Ensslin (2000)was used. Such a proposal allowed a multidisciplinary perspective, capturing important concepts from economics and organizational theory to apply them to the meta-governed environment. Originality/Relevance: Metagovernance systems suggest some ability to provide democratic plurality to a social environment, in that we need to understand "if" and "how" this applies; metagovernance is recent in academia and is under discussion; we need to understand its impact in countries with developing institutional environments. Key findings: Metagoverned systems involve multiple players; difficulty of reconciliation raises transaction costs, both ex-ante - to achieve consensus in the network - and ex-post - when creating mechanisms to deal with disgruntled actors. Such a scenario leads key players to effect coalitions to 'narrow the road' to their own interests, and practice corporate political activity seeking to influence decision making. Actions will focus on impacting the public agent designated as metagovernor, in order to influence possible changes in the environment (regulation). Theoretical/methodological contributions: An articulated map has been proposed, presenting the cycle of interactions within a metagoverned environment. It shows that sometimes the decisions taken are not the most democratic ones, but those of interest to coalitions. Social contributions / to management: From a legitimacy perspective, it is necessary to understand how the outcome of networked decision-making can become more democratic, and how metagoverned environments can become less susceptible to harmful corporate political activity, especially in developing democracies.
This insight highlights the concept of creating public value by public managers through the assets entrusted to them by the public, including public money, authority to regulate private actors, and the pre-existing public spirit. To achieve this, public managers need to have entrepreneurial skills and a restless, value-seeking imagination to identify and exploit opportunities for public welfare. However, this management style requires a full understanding and adherence to democratic legitimation and public accountability processes. Finally, I emphasizes the importance of public managers focusing on creating public value, as it provides a framework for effective public service delivery and the advancement of the common good.
An increasing number of studies are examining the relationship between entrepreneurship and growth. This relationship is controversial, especially for developing countries. Recent improvements in economic growth have led to a focus on growth inclusiveness, which spreads economic opportunities throughout a society. However, studies that focus on the role of entrepreneurship in inclusive growth remain scarce. To fill that gap, this study investigates the dynamic relationship between economic globalization, entrepreneurship, and inclusive growth in 21 African countries using panel econometrics to examine data covering 2006 to 2018. The results reveal that the impact of economic globalization and entrepreneurship on inclusive growth is positive and significant. We find that economic globalization enhances entrepreneurial development, and causality tests show that economic globalization drives inclusive growth. We also find a unidirectional causality from entrepreneurship to inclusive growth. Finally, we observe no direction of causality between economic globalization and entrepreneurship but observe a bidirectional causality between governance and entrepreneurship. We discuss the implications of these results
This article makes four claims: First, tax systems at the national, regional and global level are regulatory systems. They can and should be studied as that. Second, taxation is an important extension to regulatory scholars’ empirical field of inquiry. It is a hard case to test prominent theories of new, softer modes of governance. Third, in the era of liberalization and globalization tax governance exhibits similar institutional changes as regulatory governance. It has changed (1) from national to multi‐level governance, (2) from public and direct to indirect with increased involvement of private actors, and (3) from hierarchical and coercive to cooperative and responsive. Fourth, since the global financial crisis, the new sites of tax governance have increasingly been involved in the fight against tax evasion and avoidance and have become more politicized. These claims are substantiated by reference to the contributions to the special issue that this article introduces.
Ensuring compliance with the tax laws is an enduring challenge for all governments. However, the methods by which governments enforce the tax laws, and by which individuals and firms evade their taxes, change over time, due at least in part to changing technology. In this paper I examine how changing technology, especially changes driven by the transformation of information into digital formats for use by computers, seems likely to affect tax evasion in the years ahead. I argue that many of these changes in technology will improve the ability of governments to decrease tax evasion, mainly by increasing the flow of information to governments. However, I also argue that these changes in technology will open up new avenues by which some individuals and some firms can evade (and avoid) taxes. At this point it is unclear which trend will dominate, so that the effects of technology on the overall level of tax evasion are uncertain. Even so, I believe that the distributional effects of these technological changes are more predictable, given the differential effects of technology on the abilities of individuals of different levels and types of income to evade their taxes. Indeed, I argue that changing technology will make evasion increasingly difficult for most taxpayers, especially those subject to employer withholding and third party information reporting, but that evasion will be increasingly viable for a small number of taxpayers, especially very high income taxpayers. Regardless of the overall impact of technology on the level of tax evasion, I conclude that the effects of technology will likely increase economic inequality.
A globalização e a internacionalização das empresas são fenômenos que precisam ser considerados pelas modernas administrações tributárias. Fiscalizar e combater a evasão fiscal, o planejamento tributário agressivo e a lavagem de dinheiro somente com medidas domésticas tende a ser inócuo em uma dimensão global. Para lidar com esse cenário, novas formas de regulação e reguladores são exigidas. Sob este ponto de vista, um esforço no sentido de assinar tratados internacionais, convenções e acordos parece ser uma solução viável. O arcabouço legal brasileiro contém princípios e regras que tornam a cooperação internacional e o intercâmbio de informações (eoi) com outros países possíveis. Além disso, a administração tributária brasileira tem amplos poderes de acesso para obter informações para fins de intercâmbio internacional, assim como conta com ferramentas para produzir coercitivamente tais informações. Nesse contexto, o brasil tem realizado grandes esforços para adequar suas instituições e legislações aos padrões internacionais no que tange à troca de informações tributárias. No entanto, existem alguns obstáculos que precisam ser observados para uma execução mais eficaz destes mecanismos. Nesse sentido, este artigo se propõe a analisar algumas questões importantes referentes à moldura jurídica e institucional brasileira no intercâmbio de informações tributárias, tais como, a mudança de paradigma na atuação das administrações tributárias, a agenda da transparência fiscal e os acordos internacionais em matéria eoi, as decisões do supremo tribunal federal sobre o sigilo bancário e os direitos dos contribuintes brasileiros em relação ao eoi.
Marginal income tax rates in advanced industrial countries have fallen dramatically since the mid-1980s, but level and progressivity of income taxation continue to differ strongly across countries. This study offers a new perspective on both observations. It blends theoretical inquiry with focused quantitative analysis and in-depth investigation of seven countries: Germany, Australia and New Zealand as well as Denmark, Finland, Norway and Sweden. The study highlights the equity-efficiency tradeoffs that structure the politics of income taxation and analyses how income taxes are embedded in broader tax systems. It explains the limited but enduring importance of political parties and democratic institutions. Finally, the study paints a nuanced picture of the role of globalisation and thus also sheds lights on the pros and cons of tax coordination at the European and international levels. Chapter 1 Introduction Chapter 2 Conceptual and methodological issues in empirical veto player analysis Chapter 3 Policy ideal types, policy change and the constraint of tax competition Chapter 4 Domestic constraints and international policy differences Chapter 5 Income tax reform in Australia and New Zealand Chapter 6 Income tax reform in Scandinavia Chapter 7 Income tax reform in Germany Chapter 8 Party ideology, veto points and the setting of top marginal tax rates Conclusion Income tax policy in open economies Appendix Country abbreviations, sources and definitions Bibliography Index
This paper examines the empirical relationship between economic growth and income inequality both at aggregate and regional level using more comparable data set for 69 developing countries over the period 1965-2003. The study identifies credit market imperfection in low-income developing countries as the likely reason for a strong negative relationship between income inequality and economic growth. While in short run the relationship between growth and income inequality might be positive but over time more income inequalities reduces economic growth. Moreover, this paper finds evidence that more physical and human capital investment, openness to trade and higher government spending have statistically significant impact on enhancing economic growth and reducing inequality.
The paper tries to shed some light on the problems of centralization and decentralization within an economic union and the federal member states. Integration and decentralization are not opposite policy strategies but both meaningful if the single public goods and services supplies are analyzed in more detail. Both strategies doubtlessly have advantages, which can be realized if the manifold possibilities are combined in an efficient approach of good governance. Best practice approaches in inter- or supra-national integration, fiscal federalism and taxation do exist and have to be successfully implemented. Obviously such a modern fiscal policy has to be accompanied by an appropriate monetary policy, which in an economic union has to be carried out by an independent central bank as one of the necessary countervailing powers in a democratic setting. A modern fiscal policy strategy efficiently controls budget deficits, which naturally have to be limited to finance reliable public investments. Such strategy has to be safeguarded through modern methods of budgeting and fiscal planning. Modern public management with a clear code of conduct for the government officials ensures corruption free administration.
The objective of this study is to examine the impact of product innovation, environmental strategy, and circular economy on sustainable development in organizations in Northeastern Brazil. The study used a quantitative and descriptive research method, employing a survey with the snowball sampling technique applied to 557 companies in the region. Three research hypotheses were formulated and analyzed using statistical tests, confirmatory factor analysis, and multiple linear regression. The results showed that the relationships between product innovation, environmental strategy, and circular economy had a moderate intensity of influence on sustainable development with an explanation index greater than 37% (R2). The study concludes that Model 3, representing the relationship between circular economy and sustainable development, had the greatest influence on sustainable development with a moderate intensity of 46.20%. As natural resources are finite and the world population continues to grow exponentially, organizations must reduce their impact on the environment and consumption of natural resources. Environmental strategy and circular economy can effectively contribute to sustainable development, which is crucial for meeting the increasing demands for new products, food, housing, health, education, employment, and income.
The EU and WTO legal regimes on state aid and subsides may contribute to the EU and OECD objective of tackling harmful tax competition. In EU Member States relations with third countries, harmful tax competition may arise both in relation to tax derogations by EU Member States applied to activities linked with third countries, and in relation to tax derogations by non-EU countries potentially affecting the Policy Decisions of the EU Member States or Decisions about the location of multinational businesses. In order to illustrate some of these problems, this article addresses two recent Decisions by the EU Commission and the EFTA Surveillance Authority regarding derogations from general rules on tax amortization and corporate taxation potentially involving fiscal aid and/or harmful tax competition.
In this paper, we mobilize newly available historical series from the World Inequality Database to construct world income distribution estimates from 1820 to 2020. We find that the level of global income inequality has always been very large, reflecting the persistence of a highly hierarchical world economic system. Global inequality increased between 1820 and 1910, in the context of the rise of Western dominance and colonial empires, and then stabilized at a very high level between 1910 and 2020. Between 1820 and 1910, both between-countries and within-countries inequality Q5 were increasing. In contrast, these two components of global inequality have moved separately between 1910 and 2020: Within-countries inequality dropped in 1910-1980 (while between-countries inequality kept increasing) but rose in 1980-2020 (while between-countries inequality started to decline). As a consequence of these contradictory and compensating evolutions, early 21st century neo-colonial capitalism involves similar levels of inequality as early 20th century colonial capitalism, though it is based on a different set of rules and institutions. We also discuss how alternative rules such as fiscal revenue sharing could lead to a significant drop in global inequality.
The growing economic openness expressed in the globalization of independent economic systems has created problems as well as opportunities that cross formal borders in unexpected ways. Professors Assaf Razin and Efraim Sadka explore the ramifications of globalization in selected public finance issue areas. Seven main topics are covered by the sixteen papers in the volume: the international mobility of technology; capital flows and exchange rate misalignments; tax incentives and patterns of capital flows; income redistribution and social insurance in federal systems; tax harmonization and coordination; political economy aspects of international tax competition; the migration of skilled and unskilled labour; and the fiscal aspects of monetary unification.
The pending tax ruling constitute a new saga in the continuous political battle between the Member States and the European Commission about the limits of article 107 TFEU within the complex multi-level tax governance system of the EU. This article claims that the legal determination of these limits - as reflected in the distinction between general measures and fiscal state aids - cannot provide for a rational explanation concerning the balance of power between the Member States and the European Commission. Consequently, it cannot be maintained that the European Commission should merely monitor the limits of EU fiscal state aid control as defined by the Member States. Such an understanding is at odds with the prevailing neo-functionalist reality in which the European Commission is able to develop state aid policies in an independent way. This contribution reaches these conclusions on the basis of a combination of the legal and the political-economic traditions that study EU (fiscal) state aid control. It calls for more multidisciplinary academic discussion about the desirable function and limits of EU fiscal state aid control.
This chapter highlights the inadequacy of current measures to mitigate the regressive impacts of value-added tax (VAT), particularly on women as individuals, female-headed households, and female-owned businesses. It argues that the text of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), the CEDAW Committee’s jurisprudence, and the Beijing Platform all mandate the use of more progressive tax strategies, such as graduated personal income taxes and broader VAT exemptions to cover all basic needs, as well as gender-impact analysis of taxation and correction of discriminatory policies. In short, CEDAW and the Beijing Platform form a comprehensive global implementation framework designed to actively secure both formal and substantive equality in all laws, policies, and practices in all member countries, as well as in regional and global governance organizations.
We construct a theoretical model to capture the compensation and efficiency effects of globalization in a set up where the redistributive tax rate is chosen by the median voter. The model predicts that the two alternative modes of globalization- trade liberalization and financial openness- could potentially have different effects on taxation. We then provide some empirical evidence on the relationship between taxation and the alternative modes of globalization using a large cross-country panel data set. On average, globalization is associated with lower taxation but there is some evidence that in countries with high capital-labor ratio, globalization is associated with increased taxation. We make a distinction between de jure and de facto measures of globalization and find a strong negative relationship between taxation and de jure measures of globalization. The results for de facto measures of globalization are mixed.
The aim of this article is to analyse the suitability of the State aid regime as an instrument to fight harmful tax competition. There are several negative effects of such 'race to the bottom' competition, which act as significant barriers to the functioning of the internal market. Application of the State aid rules has been troubled and heavily influenced by the fluctuating policy objectives of the Commission. There has been a long established intersect between State aid and taxation, although, such overlap has been expanding and ever encroaching within the taxation policies of Member States, which is presently considered sovereign territory. The current investigations into numerous multinational enterprises, for instance Apple, signify a radical new approach adopted by the Commission, one which could not have been predicted by neither the Member States nor corporations. It is evident that the Commission have adopted the State aid rules as a tool to attack harmful tax competition, and to ensure that selective corporations are not receiving unbridled benefits through favourable tax rulings. However, the State aid regime is not and should not be used as an anti-competition instrument which allows the Commission to scrutinize every new tax measure adopted by Member States. Such developments are inappropriate and represents a radical shift away from precedent, creating uncertainty in the area of international taxation. Harmonization or regulatory competition seems a more suitable fit for the issue of harmful tax competition, plaguing the internal market.
The 2007–2009 Great Recession has led to an unprecedented increase in public debt in many countries, triggering substantial fiscal adjustments. What are the distributional consequences of fiscal austerity measures? This is an important policy question. This paper analyzes the effects of fiscal adjustments for a panel of 17 OECD countries over the last 30 years, complemented by a case study of selected fiscal adjustment episodes. The paper shows that fiscal adjustments are likely to raise inequality through various channels including their effects on unemployment. Spending-based adjustments tend to worsen inequality more significantly, relative to tax-based adjustments. The composition of austerity measures also matters: progressive taxation and targeted social benefits and subsidies introduced in the context of a broader decline in spending can help offset some of the adverse distributional impact of fiscal adjustments.
When a dozen new countries joined the European Union in the mid-2000s, political tensions spiked over disparities in corporate income tax rates. Since the time of enlargement, leaders have tried repeatedly to enhance corporate tax coordination within the EU, as a result of fears of downward pressure on corporate tax rates and states? weakening ability to collect revenues. At the same time, leaders from new member states in Eastern Europe with low corporate tax rates have contended that regional efforts to coordinate tax policies are not worthwhile, given that corporate tax competition is a global phenomenon. This article argues that corporate tax competition is more acute at the regional than the global level. While corporate tax rates are falling inside and outside the EU, we demonstrate using a large multiyear, multiregional data set that Eastern European countries have extremely low corporate tax rates relative to other EU and non-EU countries, even when controlling for multiple domestic economic and political factors. These findings support the potential efficacy of pursuing regional corporate tax reform to address the downward spiraling of rates in the EU.
The present paper provides a basis for evaluating fiscal decentralization of expenditure and tax responsibilities, by encompassing the literature on tax competition and rent seeking. Both tax and rent seeking competitions are conceived of as being wasteful and self-defeating. We find that rent-seeking activities account for political distortions which may be mitigated in the process of fiscal decentralization, while tax competition results in economic distortions associated with decentralization. Welfare evaluation should be based on the balance of the political gain and the economic cost.
This paper reviews potential advantages and disadvantages of capital tax competition. Tax competition may introduce, mitigate, or exacerbate inefficiencies in both the private sector and the public sector. In different models, tax competition may either limit or increase public expenditures and taxes on mobile factors, with differing welfare consequences. We also discuss the implications of tax competition for redistributive policies and for policies dealing with risk, and we identify some of the possible empirical implications of tax competition.
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