Some Tax Advice for Emerging Economies: Lessons from the USA Experience

Abstract:     
The intent of this paper is to review the various tax systems now being used in Western democracies and evaluate their strengths and weaknesses in an attempt to determine what kind of tax system an emerging democracy should adopt if it wants to achieve certain goals. This paper is not aimed at any particular emerging economy but at all emerging economies in general, whether in Europe, Asia, Africa or Latin America. Indeed, many of the principles discussed in this paper could profitably be applied to the more developed countries in the West, although the western democracies would have difficulty implementing many of the suggestions in this paper because of the entrenched bureaucracy that has built up over the decades. Part I of this paper provides an introduction and overview. Part II examines the characteristics and attributes of the various means governments use to raise revenues. Part III discusses the advantages and disadvantages of each of the major forms of revenue raising. Part IV discusses the need to limit taxation and government spending. Part V suggests an approach to taxation for emerging economies.

JEL Classifications: H2, K34, O23, P5

Working Paper Series