On Taxes and Taxpayers:understanding the heterogeneous effects of taxation

Taxes affect the behavior of individuals, and therefore also the economy as a whole. For the most part, economists and policymakers assume that such effects are the same everywhere. If a tax has a positive economic effect in one country, it may be expected to have the same effect in another country. In this thesis I show that this is not accurate: the effects that taxes have, depend strongly on the local context.One example of this is the taxation of capital, which entails, among others, the taxation of firms, savings, and dividends. Such taxes are generally seen as harmful for economic growth. In practice, however, this does not seem to be the case everywhere. In highly developed countries in particular, higher taxes on capital are generally associated with higher economic growth. This is very different from the situation in less developed countries, where such taxes may be expected to have a negative effect.Such diversity in the effects of fiscal policy is not a unique characteristic of capital taxation, but occurs in many different areas. Due to large economic and cultural differences between countries, it is unlikely that there are any tax instruments that have exactly the same effect everywhere. As a result, general rules and recommendations about tax policy may be misleading, at least insofar as they fail to recognize the scope for differential effects