Families of Taxation: Convergence or Divergence

On the basis of cluster analysis for 21 OECD countries (using 144 tax relevant indicators like tax structure, tax-to-GDP ratios, specific tax system features) it is possible to identify four “families of taxation” (Wagschal 2005: 105, Obinger/Wagschal 2010). Remarkably Guy Peters found in the early 90s similar country-groups. His cluster analysis was based on 20 indicators (Peters 1991).They are to some extent similar to the “worlds of welfare capitalism” (Esping-Andersen 1990) and the “families of nations” concept (Castles/Schmidt/Therborn 1993). These four families of taxation can be labelled as: (1) the liberal-conservative family, thee social-democratic-scandinavian family, (3) the Christian-democratic-continental family and (4) a peripher residual cluster. Two factors are important driving forces of these classification: (1) the partisan complexion of government and (2) the religious composition. Both variables also have been identified as main determinants for the development of the different welfare systems (Castles 1982, van Kersbergen 1995). It is obvious from the data that conservative and liberal parties are strong in the English family as well as in Japan and Switzerland. The Continental and Southern family have strong Christian democratic and social democratic parties, i.e. two party families promoting the welfare state. In the Nordic countries, the Social democrats are traditionally the dominant party. Relying on this research the paper has three objectives: 1) What determines the structure of national tax systems in OECD countries, i.e. the composition of the tax system? 2) Is it possible to identify convergence of the tax systems? 3) What are the driving forces for changes in the tax system?