A New Approach to Measuring Tax Effort
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...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2019-08-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/7/3/77 |
| _version_ | 1811297675929190400 |
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| author | Basil Dalamagas Panagiotis Palaios Stefanos Tantos |
| author_facet | Basil Dalamagas Panagiotis Palaios Stefanos Tantos |
| author_sort | Basil Dalamagas |
| collection | DOAJ |
| description | 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. |
| first_indexed | 2024-04-13T06:08:33Z |
| format | Article |
| id | doaj.art-0dfca03a6ffa4bcf8ba9403ffcdf5fff |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-04-13T06:08:33Z |
| publishDate | 2019-08-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-0dfca03a6ffa4bcf8ba9403ffcdf5fff2022-12-22T02:59:09ZengMDPI AGEconomies2227-70992019-08-01737710.3390/economies7030077economies7030077A New Approach to Measuring Tax EffortBasil Dalamagas0Panagiotis Palaios1Stefanos Tantos2Department of Economics, National and Kapodistrian University of Athens, 1, Sofokleous & Aristidou str., 105 59 Athens, GreeceDepartment of Economics, National and Kapodistrian University of Athens, 1, Sofokleous & Aristidou str., 105 59 Athens, GreeceDepartment of Economics, National and Kapodistrian University of Athens, 1, Sofokleous & Aristidou str., 105 59 Athens, GreeceThis 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.https://www.mdpi.com/2227-7099/7/3/77tax efforttax capacityutility maximizationoptimal tax revenue |
| spellingShingle | Basil Dalamagas Panagiotis Palaios Stefanos Tantos A New Approach to Measuring Tax Effort Economies tax effort tax capacity utility maximization optimal tax revenue |
| title | A New Approach to Measuring Tax Effort |
| title_full | A New Approach to Measuring Tax Effort |
| title_fullStr | A New Approach to Measuring Tax Effort |
| title_full_unstemmed | A New Approach to Measuring Tax Effort |
| title_short | A New Approach to Measuring Tax Effort |
| title_sort | new approach to measuring tax effort |
| topic | tax effort tax capacity utility maximization optimal tax revenue |
| url | https://www.mdpi.com/2227-7099/7/3/77 |
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