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Can progressive taxation contribute to human development?

Author

Listed:
  • Marcus-Radu Man

    (West University of Timisoara, Timisoara, Romania)

  • Sorana Vatavu

    (West University of Timisoara, Timisoara, Romania)

Abstract

This paper aims to understand and quantify the impact of taxation on the Human Development Index. The countries considered for this research are members of the European Union and the period overviewed is 2011-2019. According to the computation of the data relevant to this research, progressively taxed countries have a higher Human Development Index than the ones that practice a flat tax system. Subsequently, the income tax as a share of GDP is also at a much higher rate in progressively taxed countries than in flat-taxed countries. Additionally, countries in the European Union that have a progressive taxed system also collect more taxes as a share of GDP than the countries that have a flat tax system. Ultimately, this paper aims to reinforce the need for the European Union’s member states that do not have a progressive taxed system to transition to one in order to have a fairer tax system that leads to a higher value of the Human Development Index and higher governmental revenues.

Suggested Citation

  • Marcus-Radu Man & Sorana Vatavu, 2022. "Can progressive taxation contribute to human development?," Journal of Financial Studies, Institute of Financial Studies, vol. 13(7), pages 132-145, November.
    • Handle: RePEc:fst:rfsisf:v:13:y:2022:i:13:p:132-145
    DOI: 10.55654/JFS.2022.7.13.10
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    References listed on IDEAS

    as
    1. Sorana Vatavu & Oana-Ramona Lobont & Petru Stefea & Daniel Brindescu-Olariu, 2019. "How Taxes Relate to Potential Welfare Gain and Appreciable Economic Growth," Sustainability, MDPI, vol. 11(15), pages 1-16, July.
    2. Bird, Richard M., 2012. "Taxation and Development: What Have We Learned from Fifty Years of Research?," Working Papers 2220, Institute of Development Studies, International Centre for Tax and Development.
    3. Madalina Ecaterina Popescu & Eva Militaru & Larisa Stanila & Maria Denisa Vasilescu & Amalia Cristescu, 2019. "Flat-Rate versus Progressive Taxation? An Impact Evaluation Study for the Case of Romania," Sustainability, MDPI, vol. 11(22), pages 1-16, November.
    4. Tanzi, Vito & Zee, Howell H., 2000. "Tax Policy for Emerging Markets: Developing Countries," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(2), pages 299-322, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    taxation; flat tax; progressive tax; Human Development Index; income tax.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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