Taxation of Corporations and Their Impact on Economic Growth: The Case of EU Countries
Baranová Veronika, Janíčková Lenka
Economic Growth, Investment, Implicit Tax Rates, Effective Marginal Tax Rate, Average Effective
Tax Rate, Partial Tax Quota
One of the most debated questions in economy is the relationship between tax rates and economic
growth. Especially taxation of corporations has great importance because a corporate tax
base is quite a mobile factor of production and simultaneously the tax competition is currently
still tougher due to required economic development particularly in the context of the economic
crisis. Based on the available literature, we can deductively derive and suppose an inverse relationship
between tax burden and economic growth; on the other side, the degree of correlation
is not so obvious.
The aim of this article is to verify the expected negative relationship between corporate taxation
and long-term economic growth in the sample countries. This analysis is based on the neoclassical
growth model extended with human capital. Furthermore, the model associated with the
variable reflecting the different possibilities to measure the tax burden on corporations, especially
tax quota separated on income taxation of corporations, the implicit tax rate on capital and
effective tax rates secured by micro-forward looking methods. The default is a panel regression
methodology and related methods of data analysis. The sample consists of EU member states.
The reference periods are the annual frequencies in the time frame 1998 - 2010.
Taxation of Corporations and Their Impact on Economic Growth: The Case of EU Countries [PDF file] [Filesize: 604.97 KB]
Baranová V., Janíčková L. (2012). Taxation of Corporations and Their Impact on
Economic Growth: The Case of EU Countries. Journal of Competitiveness, 4 (4), 96-108 https://doi.org/10.7441/joc.2012.04.07