TY - JOUR
T1 - Measuring the effective tax burden in the real world
AU - Polito, V
PY - 2009/6
Y1 - 2009/6
N2 - This paper argues that forward-looking indices of the effective tax burden on income from capital – namely, effective marginal and average tax rates – are negatively biased because traditional models overlook dividend constraints associated with financial tax incentives, such as accelerated depreciation. The paper presents measures of the two indices adjusted to remove the bias and compares the new indices with the traditional ones. Numerical simulations carried out to quantify the magnitude of the bias for France, Germany, Ireland, Italy and the UK give evidence of sizeable distortions in the unadjusted indices and, in turn, suggest significant mismeasurement in the current assessment of the effective tax burden.
AB - This paper argues that forward-looking indices of the effective tax burden on income from capital – namely, effective marginal and average tax rates – are negatively biased because traditional models overlook dividend constraints associated with financial tax incentives, such as accelerated depreciation. The paper presents measures of the two indices adjusted to remove the bias and compares the new indices with the traditional ones. Numerical simulations carried out to quantify the magnitude of the bias for France, Germany, Ireland, Italy and the UK give evidence of sizeable distortions in the unadjusted indices and, in turn, suggest significant mismeasurement in the current assessment of the effective tax burden.
UR - http://www.scopus.com/inward/record.url?scp=70350179972&partnerID=8YFLogxK
UR - http://dx.doi.org/10.1111/j.1475-5890.2009.00095.x
U2 - 10.1111/j.1475-5890.2009.00095.x
DO - 10.1111/j.1475-5890.2009.00095.x
M3 - Article
SN - 0143-5671
VL - 30
SP - 247
EP - 278
JO - Fiscal Studies
JF - Fiscal Studies
IS - 2
ER -