Template-type: ReDIF-Paper 1.0


Author-Name: Andrey Timofeev
Author-Workplace-Name: International Center for Public Policy, Georgia State University
Author-Workplace-Email: atimofeev@gsu.edu

Title: Tax Structure and Revenue Volatility

Abstract: In this paper, I discuss the implications of changing tax structures for the trade-off between long-run revenue growth and short-run volatility of revenues produced by tax portfolios utilized in different countries. I argue that the issue of uneven growth over years is methodologically similar to the one of uneven distribution of resources among economic units in any given year. Therefore, one can utilize the Generalized Entropy (Theil) family of inequality indices in order to quantify relative contribution of economic and noneconomic factors to revenue instability. While it is important to understand the resistance of tax systems to economic shocks, the latter might not be the main source of revenue instability, at least in OECD countries. Rather than the prevalence of unstable tax sources, the resistance of tax systems to economic shocks appears to be determined by correlation (or lack thereof) among constituent tax sources.

Length: 15 pages

Creation-Date: 2025-12

File-URL: https://icepp.gsu.edu/files/2026/01/paper2517.pdf
File-Format: application/pdf

Handle: RePEc:ays:ispwps:paper2517