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Do revenue-neutral tax swaps boost growth?

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  • Hüseyin Şen
  • Ayşe Kaya

Abstract

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.

Suggested Citation

  • Hüseyin Şen & Ayşe Kaya, 2023. "Do revenue-neutral tax swaps boost growth?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 26(4), pages 401-420, October.
    • Handle: RePEc:taf:jpolrf:v:26:y:2023:i:4:p:401-420
    DOI: 10.1080/17487870.2023.2238107
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    Cited by:

    1. Zhang, Xiekui & Huang, Yihan & Fenglan Wei,, 2024. "The incentive effects of the macro tax burden on economic growth: A negative or positive incentive effect? Analysis based on panel data," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 128-147.

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