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Ideology and Tax
Revenues in Latin
America
Ernesto Stein
Lorena Caro
Regional Seminar on Fiscal Policy
Santiago, Chile, March 2013
Motivation
• Shift to the left is probably the most important political
development in Latin America in the last 15 years.
• 1998 election of Chavez in Venezuela just the beginning,
followed by Lagos, Lula, Kirchner, Vazquez, Morales,
Correa…
• Shift was pretty robust. Most countries that switched to the left
stayed on the left (Chile, Guatemala being recent exceptions)
Shift to the left
Timeline: Leftist Presidents in America Latina. 1998-2009
Venezuela - Chavez
Venezuela - Chavez
1998
1999
2000
2001
2002
Dominican Republic Mejia
Chile - Lagos
Brazil - Lula
Nicaragua - Ortega
Argentina - N.
Kichner
Brazil - Lula
2003
2004
Venezuela - Chavez
Paraguay - Lugo
Guatemala - Colom
2005
Uruguay - Vasquez
2006
2007
2008
2009
Bolivia - Morales
Ecuador - Correa
Argentina - C.
Kichner
Chile - Bachelet
Source: Debs and Helmke (2008)
Shift to the left
Leftist Presidents,% Total Presidents
0
20
40
60
The Shift to the Left in Latin America
1990
1993
1996
1999
Year
2002
2005
2008
Source: Author's calculation based on data from Debs and Helmke (2008)
Motivation
• Lots of work focused on documenting shift and exploring
factors behind it (see Levitsky and Roberts, 2011).
• Very little work on the policy impact of this shift.
• In this paper, we focus on the impact of the shift to the left on
one specific aspect of economic policy: fiscal revenues.
• Fiscal revenues is a good variable to look at. Larger
government commonly associated with the left; lower taxes
and limited spending is usually associated with the right.
• This is expected to be the case in particular for tax bases that
fall predominantly on the rich, such as income taxes.
• We will look at impact on overall tax revenues, but also on
some specific tax bases: income taxes, VAT and labor taxes.
Tax revenues in Latin America are comparatively low…
5
10
15
20
Total Tax Revenue, %GDP
25
Total Tax Revenues
1995
1997
1999
2001
2003
2005
2007
2009
Year
OECD
Latin America
Eastern Europe
Africa
Asia
Middle East
Source: IMF(2011) and BID-CIAT(2012)
Number of countries by region: OECD 32, Eastern Europe 6, Asia 12, Latin America 20, Africa 21, Middle East 6
…even after controlling for development, informality, sectorial
structure of the economy and age composition
Tax Pressure Gap between 2007-2009
Eastern Europe
3.5
OECD
2.6
Africa
.45
Asia
.03
Latin America
-1.4
Middle East
-13
-15
-10
-5
0
5
Source: Author's calculation based on data from IMF(2011), BID-CIAT(2012)
Controling for: GDP per capita, Level of informality, sectoral structure of the economy, age composition and rents from natural resources
But in recent years, revenues in Latin America have been
catching up
Changes in average Tax Revenues
Average Tax Revenue(07-09) - Average Tax Revenue(91-93)
Latin America
3.67
Asia
1.35
Middle East
.672
Africa
.407
OECD
-.0194
0
1
2
3
4
Source: Author's calculation based on data from IMF, BID-CIAT.
Controling for: GDP per capita, Level of informality, sectoral structure of the economy age composition and rents from natural resources
Motivation
• Could it be that the shift in ideology observed in the region
may be partly responsible for the increase in tax revenues?
• We will explore this empirically, using IDB-CIAT revenue
data.
• We use data on ideology from expert surveys (Debs and
Helmke, 2008, Murillo et al, 2008) as well as elite surveys of
legislators (PELA).
• We find that the left is associated with higher revenues, in
particular with regards to income tax revenues.
Relevant literature
• Literature on impact of partisanship/ ideology on macro
outcomes goes back to Hibbs (1977). He found that leftleaning governments in developed countries had higher
inflation, lower unemployment. Unemployment decreased
with Democratic (US) and Labour (UK) governments,
increased with Republican and Conservative governments
• Since early work of Hibbs, many authors have looked at
impact of ideology on fiscal outcomes. While most have
focused on debt, deficits and expenditures, some have focused
on tax revenues, mostly in developed countries
Ideology and taxes: evidence from developed countries
Author(s)
Besley and Case
(2003)
Unit of Observation
Methodology
Results
United States: States
Multivariate regression,
controlling for fixed
effects and year fixed
effects.
Goverments headed by
democracts are associated with
higher taxes and spending than
republican ones
Angelopoulos,
Economides and
Kammas (2009)
OECD Countries
Fixed Effects and GMM
PettersonLibdom(2008)
Sweden: Municipalities
Regression
Discontinuity Design
Ferreira and
Gyourko (2009)
United States: Cities
Regression
Discontinuity Design
Migueis (2010)
Portugal: Municipalities
Regression
Discontinuity Design
Left wing governments rely
more on capital relative to
labor income taxation
Left governments are
associated with higher taxes
and spending than their right
counterparts
There is no significant impact
of partisanship on taxation
Left wing municipalities are
more likely to adopt a
municipal corporate tax
Ideology and taxes: evidence from Latin America
• Literature on ideology and tax policy very recent, very sparse.
• Sakurai and Menezes-Filho (2010) look at electoral cycles and
partisan cycles in panel of Brazilian municipalities. They find
impact of ideology on spending but not on tax collection.
• Machado and Stein (2012) also look at Brazilian municipalities,
using RDD. They find some evidence that the left collects more
revenue than the right from business taxes, but less revenue from
property taxes.
• Hallerberg and Scartascini (2011) look at determinants of
different types of tax reform. They find that left leaning
governments are more likely to implement tax reforms that
result in increased taxes, and, in particular, in income tax
revenues.
Ideology and taxes: evidence from Latin America
• Hart (2010) uses expert survey data on ideology, looks at impact
on taxation in a context in which tax policies are constrained by
globalization. Finds that tax revenues are higher for right wing
governments compared to their left leaning counterparts because
they are more willing to rely on regressive consumption taxes.
• In comparison to Hart (2010), we use wider set of countries (17
rather than 9), wider period coverage (through 2009 rather than
2006), wider variety of ideology variables (not just expert
surveys but also elite legislator surveys), as well as a broader set
of methodologies.
Revenue data
• The taxation data taken from IDB/CIAT dataset (used for the
2013 IDB flagship report on taxation). Available for 21
countries in Latin America between 1990-2009, disaggregated
by revenue source.
• Tax revenue data corresponds to the general government level.
Comparable across countries and time (results robust to using
central government data)
• High quality data validated by country governments.
• We use data on (all in proportion to GDP):
–
–
–
–
Total tax revenues excluding social security taxes.
Income tax revenues.
Revenues from VAT.
Revenues from social security taxes.
Ideology data – expert surveys
• We use data from Debs and Helmke (2008), who build on earlier
efforts by Coppedge (1997) and others.
• Covers 18 countries in Latin America, from 1990 through 2009.
• Governments coded on 5 point scale (1-left, 2-CL, 3-C, 4-CR, 5-R).
We follow these authors in using a dummy for governments on the
left. We also used a dummy for L+CL.
• For robustness, we use data from Murillo et al (2008) also from
expert surveys. They have a more narrow view of what is “left”. We
also combine both sources, and build a dummy for governments that
are coded as L or CL in both surveys.
• Potential problem with expert surveys: tends to be retrospective (an
expert today coding a past administration). Thus, we cannot rule out
possibility that experts code as left (ex-post) a government because
it raised certain taxes.
Ideology data – elite survey of legislators
• The second ideology measure based on Parliamentary Elites of
Latin America survey conducted by the University of
Salamanca, available for 18 countries.
• Survey asks deputies about ideological position of main parties
on a 1 (left) to 10 (right) scale. It also asks about ideology of
key politicians (including the president).
• We used the average placement of the president’s ideology as
our ideology measure.
• Advantage: these are not retrospective.
– For example, survey corresponding to 1997-2001 legislature in
Argentina conducted in May/June 1998.
• Disadvantage: lower coverage, as some countries have only
one or two waves of the survey.
Descriptive Statistics
Variable
Revenues
Total Tax Revenues
(% GDP)
VAT (% GDP)
Income Tax (% GDP)
Social Security Taxes
(% GDP)
Ideology
Left dummy (D&H)
President's ideology (PELA)
Left + Center Left (D&H)
Left (Murillo)
Left + Center Left (Murillo)
D&H + Murillo
Controls
GDP per capita (in logs)
Openness (in logs)
Self Employment
Natural Resources Rents (%
GDP)
Share of the population
under 15 and over 65 year
Number of
observation
Mean
Standard
Deviation
332 14.348
4.412
6.940
27.671
328
332
5.306
3.514
2.398
1.589
1.194
0.675
13.073
9.266
332
3.687
2.016
0.052
8.801
306
203
306
323
323
289
0.170
6.681
0.255
0.022
0.170
0.170
0.376
1.670
0.437
0.146
0.376
0.376
0
2.216
0
0
0
0
1
9.288
1
1
1
1
340 8.656
340 80.632
282 40.046
340
4.943
340 40.220
Min
Max
0.463 7.494
9.453
72.178
0 404.097
10.025 19.700 69.200
6.260
0.106
4.153 31.593
41.633
49.070
Methodology: Fixed Effects model
• Baseline model:
• This model allows us to identify the impact of ideology on
taxation from within country variation across time.
• We include year dummies to avoid spurious correlation caused
by simultaneous increase in leftist governments and revenues
over time.
• Std. errors clustered by administration.
• Additional controls: openness (WEO); informality (WDI); age
composition of the population (WDI); natural resource rents as
a share of GDP (WDI).
Fixed Effects Results (baseline)
Dependent Variable
Left
Total Tax
Total Tax
VAT/GDP VAT/GDP
Revenue/GDP Revenue/GDP
(3)
(4)
(1)
(2)
1.860**
[0.590]
President's Ideology
Log GDP per Capita
Constant
-1.446
[2.395]
24.06
[20.45]
0.181
[0.199]
-0.522**
[0.142]
-0.319
[2.657]
21.32
[23.81]
-0.906
[1.099]
11.11
[9.401]
Time Year Dummies
Yes
Yes
Yes
Country Fixed Effects
Yes
Yes
Yes
Observations
281
203
281
Number of countries
17
16
17
Adjusted R-squared
0.889
0.884
0.934
Cluster standard errors in brackets ** p<0.01, * p<0.05, + p<0.1
Income
Tax/GDP
(5)
Income
Tax/GDP
(6)
1.280**
[0.363]
-0.00407
[0.0395]
0.561
[1.090]
0.988
[9.550]
Yes
Yes
203
16
0.921
Social
Social
Security/GDP Security/GDP
(7)
(8)
-0.258
[0.200]
1.465
[1.304]
-9.952
[11.13]
-0.440**
[0.138]
2.158
[1.874]
-11.68
[17.20]
-0.724
[1.254]
9.636
[10.69]
0.0676
[0.0475]
0.874
[1.722]
-3.472
[15.22]
Yes
Yes
281
17
0.734
Yes
Yes
203
16
0.720
Yes
Yes
281
17
0.908
Yes
Yes
203
16
0.915
Fixed Effects Results (with additional controls)
Dependent Variable
Left
Total Tax
Total Tax
Income
VAT/GDP VAT/GDP
Revenue/GDP Revenue/GDP
Tax/GDP
(3)
(4)
(1)
(2)
(5)
1.440**
[0.498]
President's Ideology
Log GDP per Capita
Constant
-0.729
[2.656]
8.893
[23.84]
0.318
[0.214]
-0.394**
[0.126]
-0.0775
[2.667]
19.79
[24.63]
-0.133
[1.259]
3.298
[10.72]
Income
Social
Social
Tax/GDP Security/GDP Security/GDP
(6)
(7)
(8)
0.693**
[0.185]
-0.00809
[0.0456]
1.138
[1.231]
-9.523
[10.78]
2.745**
[0.893]
-14.98+
[8.686]
-0.102
[0.198]
-0.250**
[0.0794]
2.795*
[1.229]
-8.383
[12.96]
0.168
[1.228]
10.84
[11.90]
0.0147
[0.0489]
1.123
[1.422]
0.277
[12.92]
Time Year Dummies
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Country Fixed Effects
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Observations
238
181
238
181
238
181
238
181
Number of countries
17
16
17
16
17
16
17
16
Adjusted R-squared
0.911
0.885
0.940
0.926
0.847
0.811
0.907
0.922
Controlling for Openness, self employment, the ratio of the population under 15 and over 65 years old and natural resources rents as GDP
percentage
Cluster standard errors in brackets ** p<0.01, * p<0.05, + p<0.1
Fixed Effects Results: Robustness Checks
Left
Left + Center
Left (D&H)
Left (Murillo)
Total Tax
Revenue/GDP
1.860**
[0.590]
0.812+
[0.471]
3.317*
[1.468]
0.933
[0.559]
VAT/GDP
0.181
[0.199]
0.0502
[0.160]
0.0131
[0.314]
0.0799
[0.183]
Income
Tax/GDP
1.280**
[0.363]
0.886**
[0.292]
3.034*
[1.435]
0.781*
[0.344]
Left + Center
Left (Murillo)
Left + Center
1.234*
0.0488
0.906*
Left (D&H +
Murillo)
[0.580]
[0.190]
[0.370]
Cluster standard errors in brackets ** p<0.01, * p<0.05, + p<0.1
Social
Security/GDP
-0.258
[0.200]
-0.356*
[0.158]
0.207
[0.434]
-0.479**
[0.179]
-0.502**
[0.188]
Endogeneity concerns
• An important concern has to do with endogeneity. For
example, a third factor, omitted from the model, may be
explaining both ideology and the level of taxation.
• Most obvious candidate: preferences of the population, which
are not observed
Increase in demand
for redistribution
More liberal
preferences of the
population
Increase in votes for
left leaning candidates
Higher taxes
Greater odds that
left will gain office
• If omitted variable varies through time, fixed effect model may
attribute to government ideology tax increases that are due to
changing preferences.
Exploiting the temporal pattern of taxation around
shifts in ideology
• If we think that preferences shift gradually but government ideology
jumps discretely, temporal pattern of taxation around changes in
government ideology may provide some clues.
• The idea is to follow revenues in left-bound countries within an 8-year
window centered around shift in government ideology, and check
whether there is a jump in revenues around the arrival of the left.
• If revenues jump on impact, or gradually right after the shift, we can
attribute the revenue increase to the shift in government ideology.
• If revenues rise gradually before the change in government ideology,
the increase is more likely due to shift in preferences.
• Preferences for redistribution may also jump discretely. But, one would
have to explain why such change happened exactly at the same time as
the change in government ideology.
Exploiting the temporal pattern of taxation
• Model
4
,=∝+ + ෍ ∗ + ⁡
(),+ ,
=−4
• In this exercise, “left”takes a value of 1 for the whole period for
countries that at some point adopt a leftist government.
• We create a series of dummies “Period j with j going from -4 to 4”,
to indicate the period before or after the arrival of the left.
• We interact these period dummies with our redefined “left” dummy
– For example, β-3 is the coefficient corresponding to all left-bound
countries in the year 3 before the arrival of the left.
– β2 is the coefficient corresponding to all left-bound countries during the
second period of their first leftist administration.
• The key to the interpretation of the results is not the significance of
the β coefficients per se, but rather the difference in these coefficients
within the window, before and after the event.
Exploiting the temporal pattern of taxation
VARI ABLES
Left* I -4
Left* I -3
Left* I -2
Left* I -1
Left* I +1
Left* I +2
Left* I +3
Left* I +4
Log GDP per capi ta
Constant
Total Tax
Revenue/ GDP
(1)
VAT/ GDP
(2)
I ncome
Tax/ GDP
(3)
Soci al
Securi ty/ GDP
(4)
0 .50 3
[0 .429]
0 .270
[0 .475]
0 .452
[0 .50 9]
0 .498
[0 .594]
1.0 70
[0 .671]
1.653*
[0 .669]
1.993* *
[0 .680 ]
1.691
[1.0 48]
-0 .799
[2.10 6]
18.68
[17.99]
0 .30 8*
[0 .154]
0 .239
[0 .173]
0 .10 3
[0 .262]
0 .0 650
[0 .275]
0 .10 8
[0 .236]
0 .276
[0 .198]
0 .526*
[0 .214]
0 .270
[0 .192]
-0 .663
[1.0 94]
9.061
[9.358]
0 .244
[0 .231]
0 .269
[0 .281]
0 .147
[0 .297]
0 .412
[0 .311]
0 .834+
[0 .481]
1.0 0 3*
[0 .418]
1.438*
[0 .549]
1.364*
[0 .655]
1.875
[1.250 ]
-13.37
[10 .67]
0 .255
[0 .232]
0 .150
[0 .214]
-0 .10 2
[0 .231]
-0 .220
[0 .281]
-0 .250
[0 .254]
-0 .234
[0 .226]
-0 .257
[0 .264]
-0 .326
[0 .226]
-0 .925
[1.228]
11.34
[10 .48]
Observati ons
281
281
281
Adj usted R-squared
0 .881
0 .934
0 .710
Country Fi xed Effects
Yes
Yes
Yes
Ti me Year Dummi es
Yes
Yes
Yes
Cluster standard errors i n brackets * * p<0 .0 1, * p<0 .0 5, + p<0 .1
281
0 .90 7
Yes
Yes
Results for total tax revenue
-1
0
Coefficient
1
2
3
4
Total Tax Revenue
-4
-2
0
Time
2
4
Results for different tax bases
Coefficient
0
1
2
-1
-1
Coefficient
0
1
2
3
VAT
3
Income Taxes
-4
-2
0
2
4
Time
3
Coefficient
0
1
2
-1
-2
0
Time
-2
0
Time
Social Security Taxes
-4
-4
2
4
2
4
Testing differences between means
Total Tax
Income Social Security
VAT/GDP
Revenue/GDP
Tax/GDP Taxes/GDP
-3 to -1 vs 2 to 4
1.372
Left (D&H)
4.94*
0.030
-3 to -1 vs 2 to 4
1.031
Left and Center Left (D&H)
3.36+
0.071
-3 to -1 vs 2 to 4
3.230
Left (Murillo)
25.3**
0.000
-3 to -1 vs 2 to 4
1.074
Left and Center Left (Murillo)
3.17+
0.080
Cluster standard errors in brackets ** p<0.01, * p<0.05, + p<0.1
Row 1. Difference between means. 2. F-value. 3. p-value
0.221
2.550
0.115
0.186
1.610
0.209
-0.147
0.510
0.480
0.205
2.160
0.147
0.992
3.92*
0.050
0.673
2.79+
0.100
3.192
16.07**
0.000
0.818
3.55+
0.064
-0.215
0.930
0.338
-0.219
1.120
0.295
-0.961
7.59**
0.008
-0.298
2.530
0.117
Conclusions
• Over the last 15 years, Latin America has been experiencing a shift to
the left in government ideology, and an increase in tax revenues. In
this paper, we study the link between these two trends.
• We find that total tax revenues are between 1.4 and 1.9 percentage
points of GDP higher under governments from the left, compared to
others. Thus, our results suggest that ideology is partly responsible for
increase in revenues in Latin America.
• We find a substantial impact of ideology on income tax revenues,
which increase between 0.7 and 1.3 percentage points of GDP under
left-leaning governments, but no clear impact on VAT or social
security taxes.
• The fact that revenues increase on impact following the shift in
government ideology suggests that the jump can be attributed to
changes in government ideology, rather than changes in preferences
or other factors that tend to change more gradually.
Ideology and Tax
Revenues in Latin
America
Ernesto Stein
Lorena Caro
Regional Seminar on Fiscal Policy
Santiago, Chile, March 2013
Difference in Differences
• For the purposes of this exercise, we now focus on government
changes, rather than shifts in ideology
•
These changes may fit within 4 different categories
–
–
–
–
Transitions from No Left to No Left (31)
From No Left to Left (9)
From Left to No Left (1)
From Left to Left (3)
• We only focus on the first two types, leaving out the other
transitions
• For each one of the transitions considered, we look at the two
years before the arrival of the new president, as well as the first
two of the new government.
Difference in Differences
• Model
where:
• “Left” takes a value of 1 within the 4-year window centered
around a transition to the left.
• For example, left=1 for Brazil from 2001 to 2004, even before the
arrival of Lula in 2003.
• “Post” is equal to 1 once a new presidential period begins.
• For example, post=1 for Brazil for 2003 and 2004.
• We interact “post” with our redefined “left” dummy.
• A positive and significant coefficient for the interaction term is
consistent with increased revenues for left-leaning governments
Results: Differences in Differences
VARIABLES
Left
Post
Left*Post
Log GDP per capita
Constant
Total Tax
Total Tax
VAT/GDP VAT/GDP
Revenue/GDP Revenue/GDP
(5)
(6)
(1)
(2)
1.218+
[0.667]
-0.117
[0.331]
1.603*
[0.707]
-1.255
[3.093]
23.23
[26.33]
0.984
[0.617]
-0.162
[0.251]
1.542**
[0.558]
1.376
[2.769]
14.58
[28.67]
0.0907 0.246
[0.381] [0.351]
-0.0284 -0.00232
[0.184] [0.162]
0.144
0.237
[0.309] [0.268]
-0.126
2.196
[1.547]
[1.579]
4.683
-13.82
[13.18]
[13.96]
Income
Tax/GDP
(7)
Income
Tax/GDP
(8)
Social
Security/GDP
(9)
Social
Security/GDP
(10)
0.648+
[0.360]
0.0221
[0.164]
0.918+
[0.546]
1.452
[2.041]
-9.530
[17.35]
0.394
[0.368]
-0.0182
[0.123]
0.762+
[0.406]
2.791+
[1.431]
-13.36
[15.85]
-0.116
[0.273]
0.0593
[0.123]
-0.266
[0.289]
1.945
[1.658]
-13.03
[14.10]
-0.0475
[0.307]
0.0966
[0.127]
-0.158
[0.275]
1.464
[1.675]
9.232
[17.67]
Observations
158
141
158
141
158
141
158
141
Adjusted R-squared
0.907
0.927
0.922
0.935
0.696
0.807
0.916
0.926
Aditional Controls
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Country Fixed Effects
No
Yes
No
Yes
No
Yes
No
Yes
Time Year Dummies
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Controlling for Openness, self employment, the ratio of the population under 15 and over 65 years old and natural resources rents
as GDP percentage
Cluster standard errors in brackets ** p<0.01, * p<0.05, + p<0.1
Placebo regressions
• Our βj coefficients compare revenues in left-bound countries in period j
before/after the arrival of the left to revenues in these countries outside
the event window and revenues in non-left-bound countries at any time.
• So in period 1 (first period of left administration following ideology
shift), we compare revenues in countries with new administration vs.
countries that are at different points in the political cycle.
• Could our results be capturing the impact of the political cycle?
• Placebo regressions: we center the events around the last election prior
to ideology shift in left-bound countries.
• If the increase in revenues persists, it may be due to the political cycle
effect, rather than ideology.
Placebo regressions
VARI ABLES
Left* I -4
Left* I -3
Left* I -2
Left* I -1
Left* I +1
Left* I +2
Left* I +3
Left* I +4
Log GDP per capi ta
Constant
Total Tax
Revenue/ GDP
(1)
VAT/ GDP
(2)
I ncome
Tax/ GDP
(3)
Soci al
Securi ty/ GDP
(4)
-1.264+
[0 .652]
-1.0 23+
[0 .611]
-1.231+
[0 .672]
-0 .60 8
[0 .653]
-1.10 6+
[0 .574]
-0 .710
[0 .467]
-0 .70 2
[0 .599]
-0 .731
[0 .599]
-3.639
[2.353]
42.68*
[20 .13]
0 .0 195
[0 .310 ]
0 .237
[0 .237]
0 .157
[0 .349]
0 .222
[0 .341]
0 .0 0 582
[0 .321]
0 .121
[0 .20 1]
0 .0 411
[0 .20 7]
-0 .0 326
[0 .280 ]
-0 .926
[1.0 44]
11.31
[8.931]
-0 .727*
[0 .342]
-0 .666*
[0 .286]
-0 .551+
[0 .324]
-0 .469
[0 .336]
-0 .438
[0 .315]
-0 .418
[0 .280 ]
-0 .381
[0 .335]
-0 .571
[0 .420 ]
0 .0 0 692
[1.781]
2.449
[15.19]
0 .341
[0 .353]
0 .256
[0 .30 2]
0 .252
[0 .248]
0 .30 3
[0 .237]
0 .540 * *
[0 .190 ]
0 .374
[0 .240 ]
0 .365+
[0 .198]
0 .178
[0 .271]
-0 .222
[1.269]
5.40 1
[10 .82]
Observati ons
281
281
281
Adj usted R-squared
0 .877
0 .932
0 .682
Country Fi xed Effects
Yes
Yes
Yes
Ti me Year Dummi es
Yes
Yes
Yes
Cluster standard errors i n brackets * * p<0 .0 1, * p<0 .0 5, + p<0 .1
281
0 .90 8
Yes
Yes
Placebo results: no change in tax revenue around last
government change before ideology shift
-3
-2
Coefficient
-1
0
1
Total Tax Revenue
-4
-2
0
Time
2
4
Placebo results: no change in tax revenue around last
government change before ideology shift
Coefficient
-1.5 -1 -.5 0 .5
Coefficient
-1.5 -1 -.5 0 .5
1
VAT
1
Income Taxes
-4
-2
0
2
4
Time
1
Coefficient
-1.5 -1 -.5 0 .5
-2
0
Time
-2
0
Time
Social Security Taxes
-4
-4
2
4
2
4
Placebo results: testing differences between
means
Total Tax
Revenue/GDP
-3 to -1 vs 2 to 4
0.104
0.170
0.684
Cluster standard errors in brackets ** p<0.01, * p<0.05, + p<0.1
Row 1. Difference between means. 2. F-value. 3. p-value
Left (D&H)
VAT/GDP
Income
Tax/GDP
Social Security
Taxes/GDP
-0.039
0.280
0.599
0.083
0.160
0.694
0.028
0.020
0.887