This publication provides empirical evidence on the effects of tax reform in Spain. It puts forward a simple methodology for the aggregate evaluation of complex tax reforms, as an input to informed decision-making.

The book has a three-way purpose. Firstly, it examines the concept of the marginal cost of public funds by reviewing the relevant literature. Secondly, it offers an analytical derivation of the said concept using magnitudes and parameters that can be calculated econometrically.

Finally, it presents numerical estimates of the marginal cost of funds for Spain and remaining OECD countries combined with a discussion on the personal, income tax reforms of 1999 and 2003, and the hypothetical replacement of social contributions by value added tax.