DP11259 The Taxing Deed of Globalization
|Author(s):||Peter Egger, Sergey Nigai, Nora Strecker|
|Publication Date:||May 2016|
|Keyword(s):||Globalization, Income taxes, International Trade, migration, Tax progressivity|
|JEL(s):||F1, F6, H2, H3|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=11259|
We examine the effects of globalization on the size and composition of tax revenues, worker-specific tax burdens, and effective average labor income tax rates using a unique international database on income tax calculators. We find that due to increasing mobility of firms and high-income workers, globalization led governments in OECD countries to seek tax revenues from alternative sources, specifically from employee-borne taxes paid by relatively less mobile middle-income workers. In 1994-2007, they experienced a globalization-induced rise in their personal income tax rate of around 1.5, whereas the top 1% of workers faced a reduction of approximately 1.5 percentage points.