A new approach to measuring tax effort

Artikel

This paper attempts to extend the theoretical and empirical methodology employed in previous literature, by proposing a utility maximization process to estimate the optimal tax revenue from a sample of 30 countries. It is shown that an optimal tax system is defined solely by two crucial determining factors: The productive capacity of the country (GDP) and consumers' preferences (consumption spending). All the other variables can be disregarded, as macroeconomic determinants (GDP, consumption) tend to capture the impact of all the remaining factors on tax revenue. It is also shown that our utility maximization method generates tax-effort indices which do not differ significantly from those of IMF and World Bank studies. The actual tax burden for most of the sample countries is shown to be below its optimal level. As expected, the tax-effort performance of each of the sample countries appears to be affected by the variety of approaches employed throughout the text.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Economies ; ISSN: 2227-7099 ; Volume: 7 ; Year: 2019 ; Issue: 3 ; Pages: 1-25 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: General ; National Budget; Budget Systems ; Fiscal Policy
• Subject: optimal tax revenue ; tax capacity ; tax effort ; utility maximization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dalamagas, Basil A. ; Palaios, Panagiotis ; Tantos, Stefanos
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2019

Further information

• DOI: doi:10.3390/economies7030077
• Handle: http://hdl.handle.net/10419/257009
• Last update: 10.03.2025, 11:42 AM CET