Non-linear Effects of Taxation on Growth

Sergio Rebelo () and Nir Jaimovich

No 9261, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study a model in which the effects of taxation on growth are highly non-linear. Marginal increases in tax rates have a small growth impact when tax rates are low or moderate. When tax rates are high, further tax hikes have a large, negative impact on growth performance. We argue that this non-linearity is consistent with the empirical evidence on the effect of taxation and other disincentives to investment and innovation on economic growth.

Keywords: Growth; Taxes (search for similar items in EconPapers)
JEL-codes: H2 O4 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-acc, nep-fdg, nep-pbe and nep-pub
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Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Non-linear effects of taxation on growth (2013)
Working Paper: Non-linear Effects of Taxation on Growth (2012)
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