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This paper builds and analyzes a new global macro-historical database of effective
tax rates on capital and labor in 154 countries. We establish a new stylized fact: while
effective capital tax rates fell in developed countries between 1965 and 2018, they rose
in developing countries since 1990. Multiple research designs at the country, sector
and firm-level suggest that trade openness contributed to this rise, by increasing the
share of output produced in corporations and larger firms, where effective capital
taxation is higher. In contrast to a common view, globalization appears in many
countries to have supported governments’ ability to tax capital.
