Pierre Bachas, Matthew Fisher-Post, Anders Jensen, Gabriel Zucman
Globalisation has wide-ranging effects on tax systems. This column uses a new dataset of taxes on capital and labour across countries and time to assess these dynamics. The authors document a global convergence of average effective labour and capital taxes over time, as labour taxes have increased and capital taxes fallen. However, the large fall in capital taxation in developed economies contrasts its gradual rise in developing economies, albeit from a low base. This trend is consistent with evidence suggesting the causal effect of trade integration on the tax capacity of developing economies.