Tax Capacity and Growth
Author | : Vitor Gaspar |
Publisher | : International Monetary Fund |
Total Pages | : 40 |
Release | : 2016-12-02 |
ISBN-10 | : 9781475558173 |
ISBN-13 | : 1475558171 |
Rating | : 4/5 (171 Downloads) |
Download or read book Tax Capacity and Growth written by Vitor Gaspar and published by International Monetary Fund. This book was released on 2016-12-02 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Is there a minimum tax to GDP ratio associated with a significant acceleration in the process of growth and development? We give an empirical answer to this question by investigating the existence of a tipping point in tax-to-GDP levels. We use two separate databases: a novel contemporary database covering 139 countries from 1965 to 2011 and a historical database for 30 advanced economies from 1800 to 1980. We find that the answer to the question is yes. Estimated tipping points are similar at about 123⁄4 percent of GDP. For the contemporary dataset we find that a country just above the threshold will have GDP per capita 7.5 percent larger, after 10 years. The effect is tightly estimated and economically large.