Read My Lips? Taxes and Elections

Unpleasant Surprises? Elections and Tax News Shocks

“…7 Some studies examined electoral cycles in tax reforms at the local level focusing on different types of taxes (Foremny andRiedel 2014, Alesina andParadisi 2017). Fuest et al (2021) and David and Sever (2022) instead focused on electoral cycles in tax reforms in a cross-country setting. The former uses annual data and shows that governments tend to increase taxes in the post-election year, but it finds that neither the election year nor the pre-election year have a pronounced effect on tax reforms.…”

Electoral Cycles in Tax Reforms

“…Some studies explored electoral cycles in tax reforms at the local level focusing on various types of taxes (e.g., Foremny and Riedel 2014, Alesina and Paradisi 2017). One recent study by Fuest et al (2021) examines electoral cycles in tax reforms in a crosscountry setting. 4 The authors use annual data and show that governments tend to increase taxes in the postelection year, but they find that neither the election year nor the pre-election year have a pronounced effect on the timing of tax reforms in a sample of countries similar to ours.…”