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Does Corporate Tax Burden Affect Growth? Evidences from OECD Countries

Author

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  • Dima Bogdan

    (Finance Department, Faculty of Economics and Business Administration, West University of Timisoara, 16 H. Pestalozzi St., 300115, Timişoara, Romania)

  • Dima Ştefana Maria

    (ECREB – East European Center for Research in Economics and Business, Faculty of Economics and Business Administration, West University of Timisoara, J.H. Pestalozzi Street, No. 16, 300115, Timişoara, Romania, +40.256.592.588)

Abstract

This paper explores the tax burden - economic growth nexus. It advances an explanatory framework for the existence of such nexus. First, we argue that tax burden reduces the income remaining at the disposal of the private sector. Second, we empirically test for the existence of a non-linear impact of corporate tax burden on growth for a dataset of 21 OECD countries, for the period 1975 - 2012. We mostly involve mixed effects models with three levels of nested random effects. Our main empirical result consists in the evidences of a non-linear relation between corporate tax burden and economic growth.

Suggested Citation

  • Dima Bogdan & Dima Ştefana Maria, 2017. "Does Corporate Tax Burden Affect Growth? Evidences from OECD Countries," Journal of Heterodox Economics, Sciendo, vol. 4(2), pages 51-80, December.
    • Handle: RePEc:vrs:joheec:v:4:y:2017:i:2:p:51-80:n:1
    DOI: 10.1515/jheec-2017-0004
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    More about this item

    Keywords

    Tax burden; growth; mixed effects models; OECD; private sector;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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