Tax Policy Theory and Practice in OECD Countries

by Messere, Ken; de Kam, Flip; Heady, Christopher

• ISBN13: 9780199241484
• ISBN10: 0199241481
• Format: Hardcover
• Copyright: 2003-07-31
• Publisher: Oxford University Press

Summary

How do governments justify their choice of tax policy? What are the arguments for and against the choices they make? Are there common trends in the tax policy choices of OECD countries? This book provides a unique guide to tax policies pursued by the governments of OECD countries by assessingrecent policies, offering a thorough critique of their justification and looking at actual examples of policy choice. The authors give an overview of post-war tax developments, addressing in detail topics such as the dynamics of tax revenues and public sector developments. They go on to examine the arguments for and against governments' main tax policy choices, looking at personal income tax, social securitycontributions, business taxes, consumption taxation and taxes on wealth, capital gains, and property. They rigorously examine arguments used by governments to justify certain policy choices, providing an objective evaluation of both the valid and invalid arguments for the choices made with regard todomestic taxation.In addition to a thorough critique of recent tax policies, the book looks at the actual tax choices of 25 of the thirty OECD countries and aims to identify the similarities and the differences between them. The authors draw on these real examples and on their considerable experience in assessingpossibilities for future tax systems. The book will be of special interest to academics and students in the field of public finance, national and international tax policymakers, politicians, and journalists.

Author Biography

Ken Messere was formerly Head of the Fiscal Affairs Division at the Organisation for Economic Cooperation and Development (OECD), before becoming a member of the Ruding Committee advising on business taxes in EU countries. He has acted as a consultant for the OECD, the IMF and the World Bank. His previous books include Tax Policies in OECD Countries: Choices and Conflicts (IBFD 1993), and The Tax System in Industrialised Countries (OUP 1998). Flip de Kam is a tax lawyer with a strong interest in the economics of the public sector. After a career in the civil service he was appointed Professor of Public Finance at Groningen University in 1988, and has also served as Head of the Tax Analysis Unit at the OECD Centre for Tax Policy and Administration from 1997 to 1999. Christopher Heady is currently Head of the Tax Policy and Statistics Division at the OECD. He is an economist who has worked extensively on tax policy issues in both developed and developing countries, having been an Assistant Professor at Yale, a Lecturer then Reader at University College London and Professor of Applied Economics at the University of Bath. His previous books include Poverty and Social Exclusion in Europe (Edward Elgar 2002) and Fiscal Management and Economic Reform in the People's Republic of China (OUP 1995).

Table of Contents

List of Figures	x
List of Tables	xi
Introduction
Outline of the Book	1	(1)
Selection of Countries	2	(1)
The Rationale for Particular Taxes	2	(1)
`Left' and `Right'	3	(1)
Main Conclusions	3	(4)
PART I: TAX TRENDS OF THE TWENTIETH CENTURY
Trends in Tax Policy
Introduction	7	(2)
Some Generalizations by Decade (1950--2000)	9	(3)
Exogenous Influences on Tax Policy and Tax Law	12	(8)
Main Trends Between 1950 and 2000	20	(10)
Changes in Tax Administration	30	(3)
Post-war Tax Revenue Trends
Introduction	33	(1)
Tax Levels	33	(3)
Tax Mix	36	(1)
Some Explanations	37	(4)
Conclusion	41	(1)
Tax Policy and Public Sector Trends
Scope of the Chapter	42	(2)
Higher Government Spending Versus Lower Taxes	44	(4)
Tax Expenditures Versus Direct Expenditures	48	(4)
Tax Aspects of Fiscal Federalism
Introduction	52	(1)
The `Agency' Versus the `Local Autonomy' Approach	53	(2)
Alternative Sources of Revenues for Sub-national Government	55	(2)
The Theory of Tax Assignment	57	(1)
A Survey of Existing Sub-national Taxes	58	(3)
An Evaluation of Taxes to Finance Sub-national Expenditure	61	(1)
Conclusion	62	(5)
PART II: THE DESIGN OF TAXES
The Personal Income Tax
Introduction	67	(1)
Background Material	67	(7)
The Tax Base	74	(3)
The Tax Schedule	77	(7)
Total Taxes on Labour	84	(4)
Family Taxation	88	(6)
Taxes on Labour and Work Supply	94	(3)
Social Security Contributions
Three Pillars of Social Security	97	(2)
Social Security Spending	99	(2)
Paying for Social Security	101	(3)
Two Views of Social Security Contributions	104	(2)
Three Recent Issues	106	(4)
Corporate Income Tax and Other Business Taxes
Scope of the Chapter	110	(1)
The Corporation Income Tax	111	(21)
Other Taxes on Business	132	(2)
Consumption Taxation
Scope of the Chapter	134	(1)
Some Background	135	(5)
The Choice of VAT as a General Consumption Tax	140	(14)
Main Policy Options Under VAT	154	(6)
The Major Excises	160	(7)
Taxes on Wealth, Capital Gains, and Property
Introduction	167	(3)
The Rationale for these Taxes	170	(3)
Net Wealth Taxes	173	(1)
Capital Transfer Taxes	174	(3)
Capital Gains Taxation	177	(3)
Recurrent Taxes on Immovable Property	180	(7)
PART III: TAX POLICY IN PRACTICE
Tax Choices of OECD Countries
Introduction	187	(3)
Europe	190	(16)
Industrialized OECD Non-Europe	206	(5)
OECD Developing Countries	211	(3)
Future Tax Systems
Presuppositions	214	(1)
The Future of the Main Taxes	214	(4)
Tax Mix and Tax Levels	218	(2)
Will Tax Systems Converge?	220	(3)
Taxing Powers of Sub-national Governments	223	(2)
Annexes
Chapter 1
Irrationalities and Confusions	225	(7)
Chapter 3
Some Data from the First Half of the Twentieth Century	232	(1)
Convergence and Divergence	233	(3)
Fishing Expeditions	236	(2)
Limitations of International Tax Comparisons	238	(9)
Chapter 5
Tax Revenue Tables and Comments Thereon	247	(8)
Glossary	255	(4)
References	259	(4)
Subject Index	263	(3)
Author Index	266