Tax rates and economic growth in the OECD countries

Authors

  • F Padovano,

    1. Center for Economics of Institutions and Dipartimento di Istituzioni Politiche e Scienze Sociali, Università Roma Tre, Cia Corrado Segre 2, 00146 Roma, Italy Tel: +390655176402 Fax: +390655176234 E-mail: padovano@uniroma3.it
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  • E Galli

    1. Center for Economics of Institutions and Dipartimento di Istituzioni Politiche e Scienze Sociali, Università Roma Tre, Cia Corrado Segre 2, 00146 Roma, Italy Tel: +390655176402 Fax: +390655176234 E-mail: padovano@uniroma3.it
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    • *

      We wish to thank John Ashworth, Luigi Bernardi, Domenico da Empoli, Ludger schucknecht, Robert D. Tollison, and two anonymous referees for very helpful suggestions on previous drafts of the article. The usual caveat applies.


Abstract

This article proposes refined econometric estimates of effective marginal income tax rates for 23 OECD countries from 1951 to 1990. Panel regressions find such measures negatively correlated with economic growth. These results are consistent with endogenous growth theories and opposite to those of most empirical literature, which relies on measures of effective average tax rates. The negative correlation is also robust to consideration of other growth determinants.

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