Does tax structure affect economic growth? Empirical evidence from OECD countries


This study estimates the effects of revenue-neutral tax structure changes on the long-run level of income per capita using panel data for 17 OECD countries over the period 1970-2004. In contrast to previous studies, we do not find a robust ranking of different types of taxes in terms of their "growth effects". In particular, we do not obtain compelling evidence favouring consumption taxes over income taxes, or favouring personal income taxes over corporate income taxes. The only robust result appears to be that shifts in tax revenue towards property taxes are associated with a higher level of income per capita in the long run.