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30 Years of Tax Reforms: How Much Impact on Danish Growth?

In: Taxation in Crisis

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  • Otto Brøns-Petersen

    (Center for Political Studies (CEPOS))

Abstract

During three decades, Denmark has witnessed repeated tax reforms. The corporate tax rate and some marginal tax rates on labor have been cut by almost 30 percentage points. Economic theory as well as international empirical data point to a potential for economic growth, especially by reducing high marginal tax rates. In this chapter, the combined effect of 30 years of Danish tax reform is estimated to have increased GDP by almost 10 percent, and economic welfare by the equivalent of 6 percent of GDP. Nevertheless, room remains for further reform, as Danish taxes are still very high, even if the prospect for expanding tax bases further has become slim.

Suggested Citation

  • Otto Brøns-Petersen, 2017. "30 Years of Tax Reforms: How Much Impact on Danish Growth?," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Dimitrios D. Thomakos & Konstantinos I. Nikolopoulos (ed.), Taxation in Crisis, chapter 6, pages 121-144, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-319-65310-5_6
    DOI: 10.1007/978-3-319-65310-5_6
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    References listed on IDEAS

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