Abstract
This paper analyses whether and to what extent politiciansmanipulate tax structures strategically in order to winelections or for ideological purposes. We introduce anindicator for tax structure turbulence which measures thedegree to which a country's tax structure changes from oneyear to another. Using data on 18 OECD countries over theperiod 1965–1995, we find clear evidence of a politicalbudget cycle in national tax structures. More precisely, wefind that in election years, tax structures are changedsignificantly less than in other years. Further, thedispersion of political power significantly lowers the abilityof governments to change the tax structure. We do not,however, find any evidence of partisan budget cycles innational tax systems following political regime changes.
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Ashworth, J., Heyndels, B. Tax Structure Turbulence in OECD Countries. Public Choice 111, 347–376 (2002). https://doi.org/10.1023/A:1014957130671
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DOI: https://doi.org/10.1023/A:1014957130671