EFFECTIVE TAX RATES IN MACROECONOMICS - CROSS-COUNTRY ESTIMATES OF TAX RATES ON FACTOR INCOMES AND CONSUMPTION

This paper proposes a method for computing tax rates using national ac counts and revenue statistics. Using this method we construct time ser ies of tax rates for large industrial countries. The method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases. This m ethod yields estimates of effective tax rates on factor incomes and co nsumption consistent with the tax distortions faced by a representativ e agent in a general equilibrium framework. These tax rates compare fa vorably with existing estimates of marginal tax rates, and highlight i mportant international differences in tax policy.