Culture and Tax Structures
University of Hannover
Leibniz Universität Hannover - Economics and Business Administration Area; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Vienna University of Economics and Business Administration
February 29, 2012
CESifo Working Paper Series No. 3748
We argue that societies with a stronger tendency towards postmaterialist life goals tilt the tax structure towards personal income taxes and away from corporate taxation. We provide empirical evidence for this correlation in OECD countries. To address endogeneity issues we then use an epidemiological approach and employ the cultural values of second-generation immigrants to the US as an instrument for the degree of postmaterialism in their ancestral countries. Estimations with this approach re-confirm that personal taxes are higher, both in absolute and relative terms, in more postmaterialist countries.
Number of Pages in PDF File: 20
Keywords: tax structure, taxation, social values, culture
JEL Classification: H110, H200, Z100
Date posted: March 5, 2012
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