A Panel Data Analysis of Taxation in Europe: Social Contributions Matter
This paper provides an analysis of the taxation structure in Europe, and its possible impact on growth. The assumption is often made that a decrease in taxes will improve growth. The study covers the period 1985-2003, the 12 countries belonging to the euro zone, and details the different categories of taxes across countries. The panel data analysis is based upon an error component model. The only negative relationship between growth and taxes is found when considering the social contributions. In other words, policymakers willing to positively impact their country's growth should concentrate first on the reduction of social contributions.
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Volume (Year): IV (2005)
Issue (Month): 4 (July)
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