Political Regimes, Institutions and the Nature of Tax Systems

Abstract

To the political economist, the variety of observed forms of taxation presents an interesting research challenge and raises a number of important questions. Can the seemingly confusing array of data be classified in a meaningful way? Is it possible to explain both differences and similarities in tax regimes? How do political factors and institutions influence the nature of observed tax systems? How do such factors interact with the underlying economy in determining the use of different revenue sources? Can the comparison of international tax regimes help in formulating better policy? In this paper, we assess the contributions of current research in political economy to provide answers to these questions, while also presenting some new statistical results on the relation between tax structure and political regimes.

Keywords: tax structure, political regimes and institutions, political equilibria

JEL Classification: D72, H20, H24, H25