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RESEARCH PRODUCT

Tax Design in the OECD: A Test of the Hines-Summers Hypothesis

Davide FurceriGeorgios Karras

subject

MacroeconomicsEconomics and EconometricsDouble taxationIncome tax; Consumption tax; Country size; Trade opennessjel:E60Monetary economicsTax reformInternational taxationjel:H20Consumption taxValue-added taxIncome taxOpenness to experienceEconomicsState income taxincome tax

description

This paper investigates the effects of economic size and trade openness on tax design in the OECD. Using data for 30 OECD countries over the 1965–2007 period, we test the recently proposed Hines-Summers [2009] Hypothesis, according to which the smaller the size and the greater the openness of the economy, the more it will rely on expenditure taxes and the less on income taxes. Our findings show that the Hines-Summers Hypothesis can claim broad, statistically significant, and robust empirical support in the OECD data sets we examined.

yearjournalcountryeditionlanguage
2011-01-01
10.1057/eej.2010.44http://hdl.handle.net/10447/59489