Tax Structure and Growth: Are Some Taxes Better Than Others?

Frida Widmalm

Public Choice, 2001, vol. 107, issue 3-4, 199-219

Abstract: Using pooled cross-sectional data from 23 OECD countries, between 1965 and 1990, I find evidence that the tax structure affects economic growth. Specifically, the proportion of tax revenue raised by taxing personal income has a negative correlation with economic growth. This result is robust to a rigorous sensitivity analysis, where I control for other plausible growth determinants in a systematic manner. Also, there is some empirical evidence that tax progressivity, measured in terms of the long-run income elasticity of tax revenue, is associated with low economic growth. Copyright 2001 by Kluwer Academic Publishers

Date: 2001
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