International Comparison of Tax and Revenue Structures: Clustering by Principal Component Analysis Using OECD Data

Abstract

  This study applies principal component analysis to government data for OECD member countries to characterize their tax and revenue structures, and clusters these countries into several groups through international comparisons. The new contributions can be summarized as follows. First, we added data for the period after 2000, and included countries that became new OECD members after the mid-1990s. Second, we examine not only individual income tax, corporate income tax, social security contributions, property tax, and indirect taxes, as in previous studies, but also total tax revenues and payroll taxes. Third, from the perspective of the potential national burden, we added the budget deficit as a revenue item to the analysis. From the analysis including the budget deficit, we found that Japan, the USA, Spain, and Costa Rica are falling into “the budget deficit trap.” It is necessary to analyze the revenue structure, including the budget deficit, rather than limiting the analysis to taxes alone.