Capital Taxation, Development, and Globalization: Evidence from a Macro-Historical Database

185 Pages Posted: 7 Mar 2022 Last revised: 24 Jun 2023

See all articles by Pierre Jean Bachas

Pierre Jean Bachas

World Bank

Matthew Fisher-Post

Paris School of Economics (PSE)

Anders Jensen

Harvard University - Harvard Kennedy School (HKS)

Gabriel Zucman

University of California, Berkeley - Department of Economics

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Date Written: March 2022

Abstract

This paper builds and analyzes a new global macro-historical database of effective tax rates on capital and labor in 154 countries. We establish a new stylized fact: while effective capital tax rates fell in developed countries between 1965 and 2018, they rose in developing countries since 1990. Multiple research designs at the country, sector and firm-level suggest that trade openness contributed to this rise, by increasing the share of output produced in corporations and larger firms, where effective capital taxation is higher. In contrast to a common view, globalization appears in many countries to have supported governments’ ability to tax capital.

Suggested Citation

Bachas, Pierre Jean and Fisher-Post, Matthew and Jensen, Anders and Zucman, Gabriel, Capital Taxation, Development, and Globalization: Evidence from a Macro-Historical Database (March 2022). NBER Working Paper No. w29819, Available at SSRN: https://ssrn.com/abstract=4051253

Pierre Jean Bachas (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
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Matthew Fisher-Post

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Anders Jensen

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Gabriel Zucman

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

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