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Rates or revenues? On the relation between tax structures and growth

Andersson, Henrik LU (2013) NEKP01 20131
Department of Economics
Abstract
This paper uses panel data from 45 OECD and Latin American countries over 21 years to estimate the effect of different tax structures on GDP growth. A key aim is to compare the results from using two common measurement techniques, statutory tax rates and tax revenues as share of total tax income. The results from GMM estimations indicate that the choice of measure not only affects the statistical results, but is of critical importance regarding economic interpretations. While the use of tax rates show a small significant negative connection between corporate income taxes and growth, tax revenues demonstrate a positive effect. The results call for more caution and better theoretical understanding regarding the effect of tax structures on... (More)
This paper uses panel data from 45 OECD and Latin American countries over 21 years to estimate the effect of different tax structures on GDP growth. A key aim is to compare the results from using two common measurement techniques, statutory tax rates and tax revenues as share of total tax income. The results from GMM estimations indicate that the choice of measure not only affects the statistical results, but is of critical importance regarding economic interpretations. While the use of tax rates show a small significant negative connection between corporate income taxes and growth, tax revenues demonstrate a positive effect. The results call for more caution and better theoretical understanding regarding the effect of tax structures on growth given the choice of measure. (Less)
Please use this url to cite or link to this publication:
author
Andersson, Henrik LU
supervisor
organization
course
NEKP01 20131
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Growth, Tax revenues, Tax structures, Tax rates, Panel data
language
English
id
3865553
date added to LUP
2013-07-01 10:39:48
date last changed
2013-07-01 10:39:48
@misc{3865553,
  abstract     = {This paper uses panel data from 45 OECD and Latin American countries over 21 years to estimate the effect of different tax structures on GDP growth. A key aim is to compare the results from using two common measurement techniques, statutory tax rates and tax revenues as share of total tax income. The results from GMM estimations indicate that the choice of measure not only affects the statistical results, but is of critical importance regarding economic interpretations. While the use of tax rates show a small significant negative connection between corporate income taxes and growth, tax revenues demonstrate a positive effect. The results call for more caution and better theoretical understanding regarding the effect of tax structures on growth given the choice of measure.},
  author       = {Andersson, Henrik},
  keyword      = {Growth,Tax revenues,Tax structures,Tax rates,Panel data},
  language     = {eng},
  note         = {Student Paper},
  title        = {Rates or revenues? On the relation between tax structures and growth},
  year         = {2013},
}