IDEAS home Printed from https://ideas.repec.org/a/vrs/reoecp/v14y2015i4p309-328n1.html
   My bibliography  Save this article

The Impact of Taxation on Economic Growth: Case Study of OECD Countries

Author

Listed:
  • Macek Rudolf

    () (VSB–Technical University of Ostrava, Faculty of Economics, Sokolská třída 33, 701 21 Ostrava)

Abstract

The aim of this paper is to evaluate the impact of individual types of taxes on the economic growth by utilizing regression analysis on the OECD countries for the period of 2000–2011. The impact of taxation is integrated into growth models by its impact on the individual growth variables, which are capital accumulation and investment, human capital and technology. The analysis in this paper is based on extended neoclassical growth model of Mankiw, Romer and Weil (1992), and for the verification of relation between taxation and economic growth the panel regression method is used. The taxation rate itself is not approximated only by traditional tax quota, which is characteristic by many insufficiencies, but also by the alternative World Tax Index which combines hard and soft data. It is evident from the results of both analyses that corporate taxation followed by personal income taxes and social security contribution are the most harmful for economic growth. Concurrently, in case of the value added tax approximated by tax quota, the negative impact on economic growth was not confirmed, from which it can be concluded that tax quota, in this case as the indicator of taxation, fails. When utilizing World Tax Index, a negative relation between these two variables was confirmed, however, it was the least quantifiable. The impact of property taxes was statistically insignificant. Based on the analysis results it is evident that in effort to stimulate economic growth in OECD countries, economic-politic authorities should lower the corporate taxation and personal income taxes, and the loss of income tax revenues should be compensated by the growth of indirect tax revenues.

Suggested Citation

  • Macek Rudolf, 2015. "The Impact of Taxation on Economic Growth: Case Study of OECD Countries," Review of Economic Perspectives, De Gruyter Open, vol. 14(4), pages 309-328, January.
  • Handle: RePEc:vrs:reoecp:v:14:y:2015:i:4:p:309-328:n:1
    as

    Download full text from publisher

    File URL: https://www.degruyter.com/view/j/revecp.2014.14.issue-4/revecp-2015-0002/revecp-2015-0002.xml?format=INT
    Download Restriction: no

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:reoecp:v:14:y:2015:i:4:p:309-328:n:1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: http://www.degruyteropen.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.