Measuring Taxes on Income from Capital: Evidence from the UK

31 Pages Posted: 26 Jun 2003

See all articles by Michael P. Devereux

Michael P. Devereux

Centre for Business Taxation, Oxford University; CESifo (Center for Economic Studies and Ifo Institute); Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR); University of Oxford - Said Business School; University of Oxford - Said Business School

Alexander Klemm

International Monetary Fund (IMF)

Date Written: June 2003

Abstract

This paper explores the empirical properties of alternative measures of the taxation of income from capital, using UK data over the last thirty years. We analyse measures of effective marginal and average tax rates, based on applying the legal parameters of the tax system to a hypothetical investment; and also measures based on observed tax payments or liabilities, scaled by various measures of income. There is a significant difference between these measures, both in their level and in how they move over time. The implicit assumption in some empirical work that these measures are broadly comparable to each other is not justified.

JEL Classification: H2, H3

Suggested Citation

Devereux, Michael P. and Klemm, Alexander, Measuring Taxes on Income from Capital: Evidence from the UK (June 2003). CESifo Working Paper Series No. 968. Available at SSRN: https://ssrn.com/abstract=419142

Michael P. Devereux (Contact Author)

Centre for Business Taxation, Oxford University ( email )

Said Business School
Park End Street
Oxford, OX1 1HP
United Kingdom
+44 1865 288507 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Alexander Klemm

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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