Effective taxation in Europe dataset.

Taxation underpins modern political economies by generating revenue, redistributing resources, and shaping private economic behavior. While comparative political economy has extensively analyzed taxation’s redistributive and stabilizing functions, its allocative role—how states use taxes to direct investment and production—remains understudied. This gap is partly due to the complexity of tax systems, where statutory rates alone fail to capture real incentives. Effective taxation measures address this challenge by assessing the actual burdens borne by firms and individuals. Responding to this need, we introduce a new dataset of effective tax rates on labor and capital for 30 European countries between 1990 and 2021, based on a backward-looking marginal tax approach. This dataset provides a foundation for cross-national research into how taxation influences resource allocation, firm strategies, and growth regimes, particularly in the context of technological and labor market transformations. By offering new empirical tools, this research note advances the integration of taxation into the comparative political economy of production and growth.