Government, Taxation and Economic Complexity
10 Pages Posted: 11 Mar 2024
Date Written: February 13, 2024
Abstract
This paper investigates the relationship between tax complexity, economic complexity, and government size. The findings are obtained through cross-country panel data and two-way fixed effects regressions, and reveal a nuanced connection: under small (large) government scales, increased tax complexity is associated with greater (smaller) economic sophistication. This suggests that tax complexity’s positive and negative aspects vary depending on the government conditions provided to the economy.
Keywords: Economic Complexity, Tax Complexity, Government Size, Taxation
JEL Classification: H21, O39, M48
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