# **Data Appendix**

**1. Quarterly Public Finance Database:** This dataset includes quarterly time series for total government revenue, tax revenue, revenues from social security, total expenditures (current and capital), interest payments and transfers.  The data refer to the consolidated general government or the consolidated central government (including social security), depending on the existence of quarterly accounts for the general government in each country.  Data are from national sources, with the exception of the UK and Canada from the OECD Economic Outlook and Belgium, Bulgaria, Czech Republic, Cyprus, France, Germany, Hungary, Poland, Slovakia and Slovenia from Eurostat.  Links to these sources are provided below.  For the Latin American and Asian countries in the sample the data correspond to central government accounts. For the remaining countries the data refers to the Consolidated General Government.

**2. Annual Tax Revenue Breakdown:** This dataset contains the breakdown of tax revenues by their components: Personal Income Tax Revenue, Corporate Income Tax Revenue, Value Added Tax Revenues (or Sales Tax Revenues, for countries with no VAT) and Social Security Contribution Revenues.  This database was constructed separately from the Quarterly Public Finance Dataset since these series are not always reported together and, many times, the tax revenue breakdown is in annual frequency.  For Latin American and Asian countries, where Central Government is being considered, only federal tax revenues are included.  Data was taken from national sources, with the exception of Argentina, Chile, Colombia and Mexico from ECLAC; Canada, UK, France, Germany, Belgium, Czech Republic, Poland, Slovakia and Hungary from OECDstats and Cyprus from the IMF’s IFS.

**3. Statutory Tax Rates:** The data related to the statutory tax rates, comprised by tax brackets and rates of Personal Income Tax, Corporate Income Tax, Social Security and VAT, comes from the OECD Tax Database for OECD countries ( _www.oecd.org/tax_ ); from the annually tax books “Individual Taxes: Worldwide Summaries” and “Corporate Taxes: Worldwide Summaries”, published by _PriceWaterhouseCoopers_ until 2005; from the _PWC_ tax webpage which has the latest statutory tax information ( _www.pwc.com/gx/en/worldwide-tax-summaries_ ); and also from the _KPMG_ Individual and Corporate Tax Rate Survey from 2006-2009.

- a. **Personal Income Tax** is generally progressive and composed by several brackets, but there are a few exceptions of countries and years in which a flat rate applies (Bulgaria and Czech Republic after 2008).

- b. **Corporate Income Tax** is usually given by a flat rate on profits, although there are also a few exceptions. Brazil has a progressive tax schedule with two brackets and Bulgaria had a progressive tax schedule in the years 19992001. For Lithuania (after 2003), Cyprus (1995-2004), Malaysia and Thailand have different tax rates according to the firm size.  In Argentina and Colombia, if the resulting chargeable corporate tax is small enough, there is a complementary tax on assets.  According to the perceived regressiveness/progressiveness of the tax schedule the imputed profit elasticities in those cases vary from 1.0 to 1.1.

- c. **VAT (or Sales Tax)** although there are many deductions according to the nature of each product, we consider the standard flat rate.  In the USA, where there are State, County and Municipal sales taxes, we consider the national average sales-tax rate.

- d. **Social Security** usually has regressive tax rates with several brackets.  UK is the only exception, since a high tax credit offsets the effect of regressiveness from the tax brackets.  The income elasticities of social security tax revenues, computed in a similar way to the personal income tax elasticities, range from 0.75-1.10.

4. **Gini Coefficients:** The Gini Coefficients were used to log-normalize of the labor earnings distribution for the computation of personal income tax and social security elasticities. Series on Gini coefficients were taken from the World Bank’s Povcal Net database for developing countries and national sources for high-income countries with the exception of France, Germany and Belgium, taken from Eurostat. Complementary data from the World Bank’s World Development Indicators were also been used to fill in missing observations and check for consistency. We interpolated remaining missing observations by a regression of the Gini coefficient on GDP for existing years. This allows for predictable shifts in the income distribution due to cyclical conditions to further inform the output elasticity of tax revenues.