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Tax Structure and Growth: Are Some Taxes Better Than Others?

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  • Widmalm, Frida
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    Abstract

    Using pooled cross-sectional data from 23 OECD countries, between 1965 and 1990, I find evidence that the tax structure affects economic growth. Specifically, the proportion of tax revenue raised by taxing personal income has a negative correlation with economic growth. This result is robust to a rigorous sensitivity analysis, where I control for other plausible growth determinants in a systematic manner. Also, there is some empirical evidence that tax progressivity, measured in terms of the long-run income elasticity of tax revenue, is associated with low economic growth. Copyright 2001 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Public Choice.

    Volume (Year): 107 (2001)
    Issue (Month): 3-4 (June)
    Pages: 199-219

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    Handle: RePEc:kap:pubcho:v:107:y:2001:i:3-4:p:199-219

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    Cited by:
    1. Yaya KEHO, 2011. "Tax Structure and Economic Growth in Cote dIvoire: Are Some Taxes Better Than Others?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(4), pages 226-235, December.
    2. Kim, Jaewon, 2006. "The Determinants of Labor Market Institutions: A Panel Data Study," Research Papers in Economics 2006:10, Stockholm University, Department of Economics, revised 06 Dec 2006.
    3. Mahdavi, Saeid, 2008. "The level and composition of tax revenue in developing countries: Evidence from unbalanced panel data," International Review of Economics & Finance, Elsevier, vol. 17(4), pages 607-617, October.
    4. Romero-Ávila, Diego & Strauch, Rolf, 2008. "Public finances and long-term growth in Europe: Evidence from a panel data analysis," European Journal of Political Economy, Elsevier, vol. 24(1), pages 172-191, March.
    5. François Vaillancourt & Pouya Ebrahimi, 2013. "L’impact du mix fiscal sur la croissance économique des provinces canadiennes, 1981–2010," CIRANO Project Reports 2013rp-03, CIRANO.
    6. Cheryl Gray & Tracey Lane & Aristomene Varoudakis, 2007. "Fiscal Policy and Economic Growth : Lessons for Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 6883, August.
    7. Addison, Tony & Chowdhury, Abdur R. & Murshed, S. Mansoob, 2002. "By How Much Does Conflict Reduce Financial Development?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    8. Peter Nijkamp & Jacques Poot, Victoria, 2002. "Meta-Analysis of the Impact of Fiscal Policies on Long-Run Growth," Tinbergen Institute Discussion Papers 02-028/3, Tinbergen Institute, revised 23 Apr 2003.
    9. Adam Fforde, 2004. "Persuasion: Reflections on Economics, Data and the 'Homogeneity Assumption'," Department of Economics - Working Papers Series 919, The University of Melbourne.
    10. Chang, Juin-jen & Shaw, Ming-fu & Lai, Ching-chong, 2007. "A "Managerial" trade union and economic growth," European Economic Review, Elsevier, vol. 51(2), pages 365-384, February.
    11. repec:rej:journl:v:16:y:2013:i:50:p:27-50 is not listed on IDEAS
    12. Bergh, Andreas & Henrekson, Magnus, 2011. "Government Size and Growth: A Survey and Interpretation of the Evidence," Working Paper Series 858, Research Institute of Industrial Economics.
    13. Nikolay Patonov, 2013. "Local Fiscal Capacity in the New Members of the European Union: Is It Efficient?," International Journal of Synergy and Research, ToKnowPress, vol. 2(1), pages 57-70.
    14. Iris Claus & Aaron Gill & Boram Lee & Nathan McLellan, 2006. "An empirical investigation of fiscal policy in New Zealand," Treasury Working Paper Series 06/08, New Zealand Treasury.
    15. Angelopoulos, Konstantinos & Economides, George & Kammas, Pantelis, 2007. "Tax-spending policies and economic growth: Theoretical predictions and evidence from the OECD," European Journal of Political Economy, Elsevier, vol. 23(4), pages 885-902, December.
    16. Lucinda, Cláudio Ribeiro de & Arvate, Paulo Roberto, 2007. "Ideological changes and tax structure : Latin American countries during the nineties," Textos para discussão 168, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    17. Institute for Fiscal Studies, 2011. "A retrospective evaluation of elements of the EU VAT system," Taxation Studies 0039, Directorate General Taxation and Customs Union, European Commission.
    18. Nijkamp, Peter & Poot, Jacques, 2004. "Meta-analysis of the effect of fiscal policies on long-run growth," European Journal of Political Economy, Elsevier, vol. 20(1), pages 91-124, March.
    19. Xing, Jing, 2012. "Tax structure and growth: How robust is the empirical evidence?," Economics Letters, Elsevier, vol. 117(1), pages 379-382.
    20. Arin, K. Peren & Berlemann, Michael & Koray, Faik & Kuhlenkasper, Torben, 2011. "The taxation-growth-nexus revisited," HWWI Research Papers 104, Hamburg Institute of International Economics (HWWI).
    21. Abdur R. Chowdhury, 2010. "External Debt and Growth in Developing Countries: A Sensitivity and Causal Analysis," Working Papers id:3151, eSocialSciences.

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