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The growth effects of tax rates in the OECD

Gemmell, Norman; Kneller, Richard; Sanz, Ismael

Authors

Norman Gemmell norman.gemmell@vuw.ac.nz

Ismael Sanz Ismael.Sanz@urjc.es



Abstract

This paper explores the merits of macro- and micro-based tax rate measures within an open economy ‘fiscal policy and growth’ model. Using annual data for 15 OECD countries we find statistically small, non-robust long-run growth effects of macro-based average tax rates on capital income and consumption, but some evidence for average labor income tax effects. Changes in ‘micro’ marginal income tax rates at both the personal and corporate levels yield statistically robust GDP responses of modest size. Both domestic and foreign corporate taxes appear relevant. In general, tax effects on GDP operate largely via factor productivity rather than factor accumulation.

Citation

Gemmell, N., Kneller, R., & Sanz, I. (2014). The growth effects of tax rates in the OECD. Canadian Journal of Economics / Revue Canadienne d'Économique, 47(4), doi:10.1111/caje.12105

Journal Article Type Article
Publication Date Mar 3, 2014
Deposit Date Jul 29, 2015
Publicly Available Date Sep 8, 2015
Journal Canadian Journal of Economics
Print ISSN 0008-4085
Electronic ISSN 1540-5982
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 47
Issue 4
DOI https://doi.org/10.1111/caje.12105
Keywords Marginal tax rates, Average tax rates, Personal tax, Corporate tax, GDP growth
Public URL http://eprints.nottingham.ac.uk/id/eprint/29432
Publisher URL http://onlinelibrary.wiley.com/doi/10.1111/caje.12105/abstract
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc/4.0
Additional Information This is the peer reviewed version of the following article: Gemmell, N., R. Kneller and I. Sanz (2014) The growth effects of tax rates in the OECD, Canadian Journal of Economics 47, 1217-1255, which has been published in final form at: http://onlinelibrary.wi...11/caje.12105/abstract. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc/4.0





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