The Sinful Side of Taxation: Is It Possible to Satisfy the Government Hunger for Revenues While Promoting Economic Growth?

REM Working Paper 057-2018

17 Pages Posted: 6 Dec 2018

See all articles by José Alves

José Alves

Technical University of Lisbon (UTL) - Department of Economics; UECE - Research Unit on Complexity in Economics

Date Written: November 9, 2018

Abstract

In this study we try to evaluate both linear and non-linear relationships between each tax item and real per capita growth. Our analysis, conducted for all the OECD countries between 1980 and 2015 and by resorting to panel data techniques in a short and long-term basis, evidences tax items threshold values for all tax components (except for taxes on individual income). In particular, for long-run economic performance, we obtain optimal threshold values for social security contributions between 7.0% and 12.43%. Lastly, our results provide some conclusions, highlighting the raise of some taxes, in GDP terms, without harming economic growth evolution.

Keywords: Economic Growth; Tax Systems; Fiscal Policy; Optimal Taxation

JEL Classification: E62; H21; O47

Suggested Citation

Alves, José and Alves, José, The Sinful Side of Taxation: Is It Possible to Satisfy the Government Hunger for Revenues While Promoting Economic Growth? (November 9, 2018). REM Working Paper 057-2018 , Available at SSRN: https://ssrn.com/abstract=3281775

José Alves (Contact Author)

UECE - Research Unit on Complexity in Economics ( email )

ISEG/UTL, Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

Technical University of Lisbon (UTL) - Department of Economics ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal

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