Tax reform and the political economy of the tax base

• 成果类型: Article
• 署名作者: Ilzetzki, Ethan
• 署名单位: University of London; London School Economics & Political Science; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2018.06.005
• 发表日期: 2018
• 页码: 197-210
• 关键词: tax reform; Tax base; political economy; lobbying

摘要

This paper studies the political prospects for reform in a model where the tax base and statutory rate are separate instruments of tax policy. The model suggests that large changes in the tax code may be easier to enact than marginal reforms. The tax base faces a tipping point where even the beneficiaries from tax exemptions support reform. At this tipping point, tax reform is Pareto improving. Politically feasible tax reform occurs when fiscal needs are large, but may nonetheless involve reductions in marginal tax rates. There is strategic complementarity in lobbying for tax exemptions, resulting in multiple equilibria. The model's main predictions are consistent with recent tax reforms in OECD countries. (C) 2018 Elsevier B.V. All rights reserved.