Extract
Average effective tax rates in Mexico.
Resumen: El artículo estima los impuestos efectivos promedio al consumo y a los ingresos al capital y al trabajo para México, de acuerdo con la metodología de Mendoza et al. (1994) y a extensiones del mismo, incluyendo dos refinamientos novedosos. En promedio, se encuentra que los impuestos al consumo se ubican entre 7 y 14%, mientras que los impuestos al trabajo y al capital están entre 8 y 12.5%, y 8.5 y 15%, respectivamente. En general, estas estimaciones son consistentes con las predicciones de la teoría, tanto para el caso de México como para una muestra de países de la OCDE. Palabras clave: impuestos efectivos, impuesto al consumo, impuestos a ingresos factoriales, política fiscal internacional
Abstract: The paper estimates average effective tax rates on consumption, labor and capital income for Mexico, using the method of Mendoza et al. (1994) and related extensions, including two novel refinements. On average, it is found that consumption taxes are roughly between 7 and 14%, whereas labor and capital income taxes are between 8 and 12.5%, and 8.5 and 15%, respectively. Tax estimates are found to be consistent with predictions from theory in general, both for Mexico as well as for a sample of OECD countries. Keywords: effective tax rates, consumption tax, factor income taxes, international tax policy Introduction Tax estimates are a very important tool of analysis in modern macroeconomics. For this reason, during the last years some efforts have been made to estimate taxes on key macroeconomic variables that are fully consistent with the representative agent framework. The seminal paper by Mendoza et al. (1994) and the extensions made by Carey and Tchilinguirian (2000), OECD (2001) and Carey and Rabesona (2002a) are precisely devoted to such a task. These authors report estimates on consumption, labor and capital income taxes over time for the major industrial countries based on aggregate macroeconomic data at hand. The idea is to measure tax rates as ad valorem estimates, where tax rates are simply calculated as the ratio of total revenues over the total tax base for each variable. (1) A major advantage of this approach in general is that it does not require collecting detailed information on household income, statutory tax schedules and other aspects of the tax law, or even projections of real present values for investment projects for particular industries. As well known, a problem with the general approach by Mendoza et al. (1994) is the lack of detailed data on national accounts. For example, income of the self-employed is not disentangled between its labor and capital components. The way Mendoza et al. (1994) circumvent this problem is by assigning all this income to capital. However, this assumption biases the estimates for labor (capital) income taxes upward (downward), as illustrated later in this paper. Thus, a major concern is how to provide alternative estimation methods for the labor component of self-employed income. Despite the usefulness of these estimates for analysis, little is known about tax rates...See the full content of this document
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