Abstract

HERNANDEZ RODRIGUEZ, Isidro. TAXATION AND DEVELOPMENT IN PERSPECTIVE. Rev.econ.inst. [online]. 2011, vol.13, n.24, pp.271-302. ISSN 0124-5996.

Economic theory predicts a positive and growing relation between tax revenues and national income. Empirical evidence from developing countries shows that collection is inelastic to income. The contrast between the theoretical prediction and experience shows, at least for the developing world, an anomaly that should be explained. It has been addressed by including new economic, political, historical and institutional concepts in the model. Social development has illuminated and admitted these concepts in the theoretical framework. But the study of the anomaly the State’s preference for taxation has been overlooked. Theoretical and empirical research assumes that the State tends to set the maximum tax rate or to extend the tax base to all people and all goods. In underdevelopment, this assumption should be tested because it may be a key to explain the inelastic behavior of tax revenues.

Keywords : development; tax capacity; tax system; tax structure; optimal tax; adjustment and macroeconomic stabilization; growth and State.

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