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Taxation and Economic Growth

  • Åsa Johansson
  • Chistopher Heady
  • Jens Arnold
  • Bert Brys
  • Laura Vartia

This paper investigates the design of tax structures to promote economic growth. It suggests a “tax and growth” ranking of taxes, confirming results from earlier literature but providing a more detailed disaggregation of taxes. Corporate taxes are found to be most harmful for growth, followed by personal income taxes, and then consumption taxes. Recurrent taxes on immovable property appear to have the least impact. A revenue neutral growth-oriented tax reform would, therefore, be to shift part of the revenue base from income taxes to less distortive taxes such as recurrent taxes on immovable property or consumption. The paper breaks new ground by using data on industrial sectors and individual firms to show how re-designing taxation within each of the broad tax categories could in some cases ensure sizeable efficiency gains. For example, reduced rates of corporate tax for small firms do not seem to enhance growth, and high top marginal rates of personal income tax can reduce productivity growth by reducing entrepreneurial activity. While the paper focuses on how taxes affect growth, it recognises that practical tax reform requires a balance between the aims of efficiency, equity, simplicity and revenue raising. Fiscalité et croissance économique Ce document examine la meilleure élaboration du système fiscal afin de promouvoir la croissance économique. Il suggère une classification des impôts selon le modèle « fiscalité et croissance », venant étayer des résultats déjà connus dans des publications antérieures, mais proposant une ventilation plus détaillée des différents impôts. Il s’avère que les impôts sur les sociétés grèvent le plus la croissance, suivis par les impôts sur le revenu des personnes physiques, et ensuite les impôts sur la consommation. Les impôts sur l’immobilier semblent les moins nocifs. Une réforme fiscale sans incidence sur les impôts et orientée sur la croissance consisterait à transférer une partie de la base imposable des impôts sur le revenu sur des impôts moins générateurs de distorsion, comme les impôts récurrents sur l’immobilier ou ceux sur la consommation. Ce document est innovant dans la mesure où il utilise des données sur les secteurs industriels et les sociétés individuelles afin de démontrer que le fait d’élaborer une nouvelle fiscalité au sein d’une large catégorie d’impôts pourrait, dans certains cas, permettre un gain d’efficacité non négligeable. Par exemple, des taux réduits d’impôts sur les sociétés pour les petites entreprises ne semble pas augmenter favoriser la croissance; de même, des taux marginaux élevés d’impôts sur les revenus des personnes physiques peut réduire la courbe de la productivité en réduisant l’activité entrepreneuriale. Alors que ce document est centré sur la manière dont les impôts affectent la croissance, il reconnaît qu’une réforme fiscale pragmatique nécessite un équilibre entre efficience, équité, simplicité et levée d’impôts.

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File URL: http://dx.doi.org/10.1787/241216205486
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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 620.

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Date of creation: 03 Jul 2008
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Handle: RePEc:oec:ecoaaa:620-en
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