Jump to ContentJump to Main Navigation
Show Summary Details
In This Section

Review of Economic Perspectives

Národohospodárský obzor; The Journal of Masaryk University

4 Issues per year

SCImago Journal Rank (SJR) 2015: 0.143
Source Normalized Impact per Paper (SNIP) 2015: 0.273
Impact per Publication (IPP) 2015: 0.121

Open Access
See all formats and pricing
In This Section
Volume 14, Issue 4 (Jan 2015)


The Impact of Taxation on Economic Growth: Case Study of OECD Countries

Rudolf Macek
  • VSB–Technical University of Ostrava, Faculty of Economics, Sokolská třída 33, 701 21 Ostrava
  • Email:
Published Online: 2015-01-29 | DOI: https://doi.org/10.1515/revecp-2015-0002


The aim of this paper is to evaluate the impact of individual types of taxes on the economic growth by utilizing regression analysis on the OECD countries for the period of 2000–2011. The impact of taxation is integrated into growth models by its impact on the individual growth variables, which are capital accumulation and investment, human capital and technology. The analysis in this paper is based on extended neoclassical growth model of Mankiw, Romer and Weil (1992), and for the verification of relation between taxation and economic growth the panel regression method is used. The taxation rate itself is not approximated only by traditional tax quota, which is characteristic by many insufficiencies, but also by the alternative World Tax Index which combines hard and soft data. It is evident from the results of both analyses that corporate taxation followed by personal income taxes and social security contribution are the most harmful for economic growth. Concurrently, in case of the value added tax approximated by tax quota, the negative impact on economic growth was not confirmed, from which it can be concluded that tax quota, in this case as the indicator of taxation, fails. When utilizing World Tax Index, a negative relation between these two variables was confirmed, however, it was the least quantifiable. The impact of property taxes was statistically insignificant. Based on the analysis results it is evident that in effort to stimulate economic growth in OECD countries, economic-politic authorities should lower the corporate taxation and personal income taxes, and the loss of income tax revenues should be compensated by the growth of indirect tax revenues.

Keywords: Taxation; Economic Growth; World Tax Index; Tax Quota; Panel Data

JEL: E22; F21 H20; C50


  • ADINA, M. (2009). The Impact of Taxation on the Investment Localization Decision in the Context of Globalization. Analele Stiintifice ale Universitatii Alexandru Ioan Cuza din Iasi. 56 (1), pp. 133-142.

  • AHMED, H., MILLER, S. (1999). Crowding-Out and Crowding-In Effects of the Components of Government Expenditure. University of Connecticut Department of Economics. Working Paper No. 02.

  • ALESINA, A. et al. (1999). Fiscal Policy, Profits and Investment. National Bureau of Economic Research. Working Paper No. 7207.

  • ARNOLD, J. (2008). Do Tax Structures Affect Aggregate Economic Growth? Empirical Evidence from a Panel of OECD Countries. OECD Economic Department. Working Papers No. 643

  • BALTAGI, H. B. (2005). Econometric Analysis of Panel Data. 3rd ed. Chichester: Wiley.

  • BARRO, R., SALA-I-MARTIN, X. (2004). Economic Growth. 2nd ed. London: The MIT Press.

  • BARRO, R., SALA-I-MARTIN, X. (1995). Economic Growth. New York: McGraw Hill.

  • BARRO, R. (1990). Government Spending in a Simple Model of Endogenous Growth. The Journal of Political Economy. 98 (5), pp. 103-125. [Crossref]

  • BECKER, J. (2009). Taxation of Foreign Profits with Heterogeneous Multinational Firms. Center for Economic Studies. Working Paper No. 2889.

  • BECKER, G. (1993). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education. Chicago: University of Chicago Press.

  • BLECHOVÁ, B. (2008). Charakteristika přístupů používaných v EU pro hodnocení efektivního daňového zatížení příjmu korporací. In: CD od Participants'Reviewed Papers from XIII. International Conference Teoretické a praktické aspekty veřejných financí. Praha: VŠE, (ISBN 978-80-245-1378-2, s. 1-11).

  • BLUNDELL, R. (2009). Optiaml Income Taxation: An Empirical Comparison of th UK and Germany. The Economic Journal. 119 (535), pp. F101-F121.

  • BREBLER, D. (2012). The Impact of Corporate Taxes on Investment: An Exlpanatory Empirical Analysis for Interested Practitioners. ZEW. Working Paper No. 12040.

  • DACKEHAG, M., HANSSON, A. (2012). Taxation of Income and Economic Growth: An Empirical Analysis of 25 Rich OECD Countries. Lund University Department of Economics. Working Paper No. 2012:6.

  • DANIEL, B., JEFFREY, P. (2013). Investment Taxation and Portfolio Performance. Journal of Public Economics. 97 (1), pp. 245-257.

  • DAVERI, F., TABELLINI, G. (2001). Unemployment, Growth and Taxation in Industrial Countries. Economic Policy. 30 (4), pp. 47-104.

  • DECOSTER, A., HAAN, P. (2010). Empirical Welfare Analysis in Random Utility Models of Labour Supply. German Institute for Economic Research, Working Paper No. 1074.

  • DUCZYNSKI, P. (2003). On Extended Versions of the Solow-Swan Model. Bulletin of Czech Econometric Society. 10 (19), pp. 39-58.

  • DWENGER, N. (2009). Corporate Taxation and Investment: Explaining Investment Dynamics with Firm-Level Panel Data. Discussion Papers of DIW Berlin. Discussion Paper No. 924.

  • FELD, L., HECKEMEYER, J. (2008). FDI and Taxation: A Meta-Study. ZEW. Working Paper No. 08-128.

  • FELD, L., KIRCHGÄSSNER, G. (2001). The Impact of Corporate and Personal Income Taxes on the Location of Firms and on Employment: Some Panel Evidence for Swiss Cantons. Center for Economic Studies. Working Paper No. 455.

  • GREENE, W. (2003). Econometrics Analysis. New Jersey: Prentice-Hall.

  • GROCHULSKI, B., PISKORSKI, T. (2007). Risky Human Capital and Deferred Capital Income Taxation. Federal Reserve Bank of Richmond. Working Paper No. 06-13.

  • HONG, D. (2012). Economic Growth and Welfare State: A Debate of Econometrics. Munich Personal RePEc Archive. Working Paper No. 39685.

  • HUŠEK, R. (1998). Základy ekonometrické analýzy II. Praha: Vysoká škola ekonomická.

  • IM, K., PESARAN, H., SHIN, Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics. 115 (1), pp. 53-74. [Crossref]

  • JACOBS, B. (2007). Optimal Tax and Education Policies and Investments in Human Capital. In Hartog (ed.), Human Capital: Theory and Evidence. Cambridge: Cambridge University Press.

  • JONES, L., MANUELLI, R. (1999). On the Taxation of Human Capital. University of Minesota - Department of Economics. Working Paper.

  • JUDD, K. (1985). Redistributive Taxation in a Simple Perfect Foresight Model. Journal of Public Economics. 28 (1), pp. 59-83. [Crossref]

  • KING, R., REBELO, S. (1990). Public Policy and Economic Growth: Developing Neoclassical Implications. Journal of Political Economy. 98 (5), pp. 126-150. [Crossref]

  • KINKOR, J. (1996). Je ekonomie blahobytu racionální?. Politická ekonomie. 44 (1), pp. 197-212.

  • KLIKOVÁ, Ch., KOTLÁN, I. a kol. (2012). Hospodářská politika. 3. vyd. Ostrava: Sokrates.

  • KNELLER, R., BLEANEY, M., GEMMELL, N. (1999). Fiscal Policy and Growth: Evidence from OECD Countries. Journal of Public Economics. 74 (2), pp. 171-190. [Crossref]

  • KOTLÁN, I. (2010). Daňové zatížení a struktura daní v ČR ve srovnání s vybranými zeměmi OECD a EU a legislativní změny ve smyslu de lege ferenda. Praha: Národohospodářský ústav Josefa Hlávky.

  • KOTLÁN, I., MACHOVÁ Z. (2013). Konstrukce alternativního ukazatele daňového zatížení na základě Saatyho metody a jeho využití v růstových modelech. Praha: Národohospodářský ústav Josefa Hlávky.

  • KOTLÁN, I., MACHOVÁ, Z. (2012a). Vliv zdanění korporací na ekonomický růst: selhání daňové kvóty? Politická ekonomie. 60 (6), pp. 743-763.

  • KOTLÁN, I., MACHOVÁ, Z. (2012b). World Tax Index: Methodology and Data. DANUBE: Law and Economics Review. 3 (2), pp. 18-33.

  • KOTLÁN, I., MACHOVÁ, Z., JANÍČKOVÁ, L. (2011). Vliv zdanění na dlouhodobý ekonomický růst. Politická ekonomie. 59 (5), pp. 638-658.

  • KUBÁTOVÁ, K., ŘÍHOVÁ, L. (2009). Regresní analýza faktorů ovlivňujících výnosy korporativní daně v zemích OECD. Politická ekonomie. 57 (4), pp. 451-470.

  • LEVIN, A., LIN, Ch., CHU, Ch. (2002). Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties. Journal of Econometrics. 108 (1), pp. 1-24. [Crossref]

  • LIN, S. (2001). Taxation, Human Capital Accumulation and Economic Growth. Japanese Economic Review. 52 (2), pp. 185-197.

  • LUCAS, R. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics. 22 (1), pp. 3-42. [Crossref]

  • MADDALA, G., WU, S. (1999). A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test. Oxford Bulletin of Economics And Statistics. 61 (0), pp. 631-652. [Crossref]

  • MACHOVÁ, Z., KOTLÁN, I. (2013). World Tax Index: New Methodology for OECD Countries 2000-2010. DANUBE: Law and Economics Review. 2013 (2), pp. 165-179.

  • MANKIW, G., ROMER, D., WEIL, D. (1992). A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics. 107 (2), pp. 407-437. [Crossref]

  • OVERESCH, M., VOELLER, D. (2010). The Impact of Personal and Corporate Taxation on Capital Structure Choices. Financz Archiv. 66 (3), pp. 263-294.

  • PARETO. V. (1971). Manual of Political Economy. New York: A. M. Kelley.

  • PFAFFERMAYER, M., STOCKL, M., WINNER, H. (2008). Capital Structure, Corporate Taxation and Firm Age. University of Innsbruck. Working Paper No. 2008-09

  • ROMER, P. (1986). Increasing Returns and Long-Run Growth. The Journal of Political Economy. 94 (5), pp. 1002-1037. [Crossref]

  • SALANIÉ, B. (2003). The Economics of Taxation. Cambridge: MIT Press.

  • SCHRATZENSTALEER, M., WAGENER, A., KOHLER-TOGLHOFER, W. (2005). Company Taxation in an Enlarged European Union. Monetary Policy and the Economy. 5 (1), pp. 96-102.

  • SOLOW, R. (1956). A Contribution to the Theory of Economic Growth. The Quartely Journal of Economics. 70 (1), pp. 65-94.

  • SWAN, T. (1956). Economic Growth and Capital Accumulation. The Economic Record. 32 (2), pp. 334-361. [Crossref]

  • SZAROWSKA, I. (2011). Jak vysoké je korporátní daňové zatížení? Acta Academia Karvinesia. 13 (2), pp. 196-207.

  • SZAROWSKA, I. (2010). Changes in Taxation and Their Impact on Economic Growth in the European Union. Munich Personal PePEc Archive. Working Paper No. 32354.

  • TAPLOS, I., VANCU, I. (2009). Corporate Income Taxation Effect on Investment Decisions in the European Union. Annales Universitatis Apulensis Series Oeconomica. 11 (1), pp. 513-518.

  • TEIXEIRA, A., FORTUNA, N. (2003). Human Capital, Innovation Capablility and Economic Growth. Faculdade de Economia. Working Paper No. 131.

  • VILLELA, L., BARREIX, A. (2002). Taxation and Investment Promotion. Banco Inter-americanode Desarrollo. Working Paper.

  • WONG, K. (2011). Progressive Taxation and the Intensity and Timing of Investment. Economic Modelling. 28 (1), pp. 100-108.

  • WOOLDRIDGE, J. (2009). Introductory Econometrics: A Modern Approach. Mason: South-Western CENGAGE Learning.

About the article

Published Online: 2015-01-29

This paper was financially supported by the VŠB - Technical University SGS grant project No. SP2014/145 “The Influence of Structure of Government Spending and Taxes in Selected Sectors and Economic Growth in the Czech Republic“.

Citation Information: Review of Economic Perspectives, ISSN (Online) 1804-1663, DOI: https://doi.org/10.1515/revecp-2015-0002. Export Citation

© 2014 Rudolf Macek. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. (CC BY-NC-ND 3.0)

Comments (0)

Please log in or register to comment.
Log in