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A tale of two taxes: State-dependency of tax policy

journal contribution
posted on 2023-08-24, 05:29 authored by KP Arin, E Gahramanov, T Omay, Xueli TangXueli Tang, Mehmet UlubasogluMehmet Ulubasoglu
In this paper, we build a simple endogenous growth model with labour and corporate taxes to investigate the asymmetric effects of tax policy over the growth trajectory. We employ a newly developed panel smooth transition model to empirically analyse a sample of 19 advanced economies over the 1961–2017 period. We find that both the asymmetric effects and the tax measures used are essential. We also find that the effects of corporate and personal taxes on long-run growth are non-linear, while the detrimental effects of personal taxes are empirically larger compared to those of corporate taxes once non-linearities are controlled for.

History

Journal

Scottish Journal of Political Economy

Pagination

1-27

Location

London, Eng.

ISSN

0036-9292

eISSN

1467-9485

Language

en

Publisher

Wiley