Do revenue-neutral tax swaps boost growth?

Do revenue-neutral tax swaps boost growth? To answer this question, we use a panel data set of nine OECD countries for the period 1981-2017 and arrive at the following main results under revenue-neutral conditions: First, the most growth-damaging tax is the corporate income tax, followed by the pers...

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Bibliographic Details
Published inJournal of economic policy reform Vol. 26; no. 4; pp. 401 - 420
Main Authors Şen, Hüseyin, Kaya, Ayşe
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 02.10.2023
Taylor & Francis Ltd
Subjects
Consumption
economic growth
Income taxes
Panel data
panel threshold model
Property taxes
Revenue
Revenue-neutral tax swaps
Social security
Tax reform
Taxation
Use taxes
Workforce
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Summary:Do revenue-neutral tax swaps boost growth? To answer this question, we use a panel data set of nine OECD countries for the period 1981-2017 and arrive at the following main results under revenue-neutral conditions: First, the most growth-damaging tax is the corporate income tax, followed by the personal income tax. Second, a shift from income taxes to consumption taxes is associated with higher growth, while a shift from social security contributions and property taxes to payroll & workforce taxes has significant negative effects on growth. Overall, our results confirm the view that revenue-neutral tax reforms focusing on a shift from income taxation to consumption and property taxation would promote growth.
ISSN:1748-7870
1748-7889
DOI:10.1080/17487870.2023.2238107