The corporate income tax rate-revenue paradox: Evidence in the EU

Joanna Piotrowska and Werner Vanborren
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Joanna Piotrowska: Ministry of Finance, Poland

No 12, Taxation Papers from Directorate General Taxation and Customs Union, European Commission

Abstract: In Europe, the decline in the corporate tax rates has not been reflected in the tax-to-GDP ratios. This paper explores to what extent the observed trend can be explained by changes in the effective tax burden on corporate income, in the share of total income accruing to the corporate sector and in total business income relative to GDP. We present an overview of the findings from previous literature, apply the methodology developed by S?rensen to decompose the most complete data available on the European level and make use of information collected from parallel studies on the effective tax burden and corporatization. The results suggest that corporatization is the driving factor for the trend observed in corporate tax revenues.

Keywords: corporate taxation; tax revenues; incorporation; corporatization (search for similar items in EconPapers)
JEL-codes: H25 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2008-10, Revised 2008-10
New Economics Papers: this item is included in nep-acc, nep-eec, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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