Does Corporate Tax Burden Affect Growth? Evidences from OECD Countries

Dima Bogdan () and Dima Ştefana Maria ()
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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

Journal of Heterodox Economics, 2017, vol. 4, issue 2, 51-80

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.

Keywords: Tax burden; growth; mixed effects models; OECD; private sector (search for similar items in EconPapers)
JEL-codes: H21 H30 O40 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:joheec:v:4:y:2017:i:2:p:51-80:n:1

DOI: 10.1515/jheec-2017-0004

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