Tax Design, Economic Efficiency and Growth

62 Pages Posted: 28 Jun 2012

See all articles by Paul van den Noord

Paul van den Noord

Organization for Economic Co-Operation and Development (OECD)

Christopher Heady

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Date Written: March 21, 2002

Abstract

In this paper van den Noord and Heady express an optimistic assessment of the possibility for the tax design to improve both equity and efficiency. The authors present a systematic discussion of how tax systems distort saving, investment, labor and product markets. They draw a wealth of examples from the reviews of individual countries tax systems periodically included in the OECD Economic Survey. From the evidence presented in the paper, distortions in economic behavior stemming from taxation appear to be substantial and the growth dividend arising from easing these distortions may be considerable. The authors point out, in particular, the need to reduce the high tax wedge on low-income earners in several European countries and to increase tax neutrality with regard to the choice of investment funding, business organization and location. The effectiveness and efficiency of tax collection, enforcement and administration need also to be improved.

Suggested Citation

van den Noord, Paul and Heady, Christopher, Tax Design, Economic Efficiency and Growth (March 21, 2002). Available at SSRN: https://ssrn.com/abstract=2094441 or http://dx.doi.org/10.2139/ssrn.2094441

Paul Van den Noord (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

Economics Department (ECO)
2 rue Andre Pascal
75775 Paris Cedex 16
France

Christopher Heady

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France

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