Flatliners: Ideology and Rational Learning in the Diffusion of the Flat Tax



Table 1: The Flat Tax Was Not Part of Other Reforms

Variable

A.

B.

C.

D-t

Constant

-32.65***

-35.36***

-37.06***

40.08***

(4.49)

(9.39)

(9.64)

(5.18)

Privatization

.23

.20

.16

.62*

(.17)

(.21)

(.24)

(.25)

Current acct

.27

.38

.54

-.18

liberalization

(.57)

(.65)

(.77)

(.48)

Price

-.0002

-.0008

-.002

-.001

liberalization

(.002)

(.003)

(.003)

(.002)

Institutional

.002

-.003

.004

-.02

reform

(.05)

(.06)

(.06)

(.03)

Capital-account

1.07***

1.06***

1.12**

-1.16***

openness

(.27)

(.35)

(.37)

(.22)

Political

-.17

-.44

-.72

7.68*

constraints

(2.06)

(2.04)

(2.56)

(3.17)

Ideology

.36***

.48*

.53**

-.15**

(.13)

(.26)

(.27)

(.07)

Diffusion

16.5***

15.57***

14.59**

-

(1.93)

(2.48)

(2.71)

Distance from

.002**

.002*

.002*

.004***

Rhein

(.001)

(.001)

(.001)

(.001)

FDI

-.95

-.89

-.58

-3.06**

competition

(.63)

(1.05)

(1.02)

(.61)

Spatial lag

-

13.06

-4.92

.11*

(unweighted)

(8.16)

(12.14)

(.07)

Spatial lag

-

-

5.2**

-

(FDI-weighted)

(2.30)

Pseudo-R2

.69

.81

.82

t.51

Log-Likelihood

-38.53

-23.47

-22.47

tP F =.000

Dependent variable is adoption of the flat tax for a given country year. Standard errors in parentheses.
Logit estimation via multiple imputation, with fixed effects for year, temporal controls and the lagged
dependent variable are omitted. N=300. Pseudo-R
2 and log-likelihood are calculated from one single
dataset, multiple imputation does not report them. *Significant at p
<.10 level, **significant at p<.05
level, ***significant at p
<.001 level. OLS regression, dependent variable is the top marginal individual
tax rate, same model specification as in Models A-C.

37



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