Corporate Income Tax and Economic Growth: Further Evidence from Canadian Provinces

2021 ◽  
Vol 77 (1) ◽  
pp. 59
Author(s):  
Bev Dahlby ◽  
Ergete Ferede
Keyword(s):  
Economic Growth ◽  
Income Tax ◽  
Corporate Income Tax ◽  
Canadian Provinces

scholarly journals Growth-Enhancing Corporate Tax Reform in Belgium

2018 ◽  
Vol 2018 (1) ◽  
pp. 1-17 ◽  
Author(s):  
Ruud De Mooij ◽  
Shafik Hebous ◽  
Milena Hrdinkova
Keyword(s):  
Public Finance ◽  
Economic Growth ◽  
Income Tax ◽  
Tax Reform ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Corporate Tax ◽  
Tax System ◽  
Corporate Tax Reform ◽  
The Government

Abstract Until 2018, Belgium had a unique corporate income tax system due to its notional interest deduction, also known in public finance literature as the allowance for corporate equity. At the same time, it had one of the highest corporate tax rates in Europe at 34 percent. The latter came under severe pressure to reform and, as of 2018, the government has started to reduce the rate, gradually to reach 25 percent in 2020. The reduction is accompanied by other measures, including a limitation of the notional interest deduction. This paper argues that the lower CIT rate is likely to be conducive to economic growth. Yet, the effects on growth would have been more favorable if the notional interest deduction would have been strengthened, rather than diminished.

scholarly journals The Role of Taxes in the Disconnect Between Corporate Performance and Economic Growth

2020 ◽  
Vol 66 (11) ◽  
pp. 5427-5447 ◽  
Author(s):  
Urooj Khan ◽  
Suresh Nallareddy ◽  
Ethan Rouen
Keyword(s):  
Economic Growth ◽  
Income Tax ◽  
Corporate Performance ◽  
Underlying Mechanism ◽  
The United States ◽  
Corporate Income Tax ◽  
Tax Rate ◽  
Corporate Profits ◽  
The Impact ◽  
The U.S

We investigate the relation between corporate performance and overall economic growth in the United States. In particular, we focus on the impact of the U.S. corporate tax regime on this relation. Exploiting time-series variation and a tax shock, we document that the relatively higher corporate income tax rate and the tax treatment of foreign earnings of U.S. corporations have contributed to a disconnect between the performance of the corporate sector and the overall economy. Specifically, the growth of domestic (national) corporate profits, on average, has outpaced the growth of the domestic (national) economy, and this disconnect increases as the difference between the U.S. corporate income tax rate and the average tax rate of the other Organisation for Economic Co-operation and Development countries increases. The underlying mechanism is fewer corporate profits being channeled into subsequent domestic investments when the U.S. tax rate is relatively higher, leading to lower economic growth. Our findings have implications for policy setters. This paper was accepted by Brian Bushee, accounting.

scholarly journals Impact assessment of corporate income tax nullification: case of Armenia

2017 ◽  
pp. 80-87
Author(s):  
O. A. Patvakanian
Keyword(s):  
Economic Growth ◽  
Comparative Study ◽  
Impact Assessment ◽  
Income Tax ◽  
Tax Incentives ◽  
Corporate Income Tax ◽  
Current Contribution ◽  
Macroeconomic Impact ◽  
Retained Earnings ◽  
The Given

Armenian economy currently experiences a range of fundamental challenges which require institutional solutions. Loans for businesses are allocated under unfavourable conditions as compared with other countries. In the given circumstances, tax incentives are one of the most important elements to ensure economic growth. One of such a tax incentives is abolishment of corporate income tax on retained earnings. The given reform has resulted in substantial economic results in Estonia in the year of 2000. Current contribution poses a comparative study of Estonia’s economy in 2000 (the year of reform) and Armenia’s economy as of now (assuming the reform might take place next year). At the same time, the paper assess the macroeconomic impact of corporate income tax nullification.

scholarly journals TAXATION AND ECONOMIC DEVELOPMENT IN THE FORMER COMMUNIST BLOC. A PANEL DATA APPROACH

2020 ◽  
Vol 5 (2) ◽  
pp. 83-91
Author(s):  
Andrei Ionut Husman
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Income Tax ◽  
Personal Income ◽  
Corporate Income Tax ◽  
Personal Income Tax ◽  
Independent Variables ◽  
Eu Member States ◽  
Starting Point ◽  
The Impact

Taxation and its implications are an increasingly debated topic since taxation is a very important tool for the governments of all countries in controlling public finances. At the same time, taxation regulates in one way or another the wealth of a country and, implicitly, of its citizens. In this sense, through this paper we aim to analyse the impact of taxation on economic growth felt by citizens, and our attention has been focused on EU Member States from the former Communist Bloc: Hungary, Poland, Romania, Slovakia and Slovenia. To measure the economic growth felt by the citizens, the best proxy is GDP per capita. Regarding taxation, we resorted to the use the revenues registered from personal income tax, corporate income tax and VAT. The chosen countries share a similar past and had in one way or another the same starting point in the 1990s. These countries are also from the same geographical region (Central and East European countries) and have to some extent comparable economies. Furthermore, we performed an econometric analysis with panel data for the period 2003-2018. The results thus obtained from the econometric tests indicated by an econometric model with random effects showed a direct positive relationship between the dependent variable and the independent variables. The coefficients obtained were statistically significant in the case of independent variables represented by the revenues from personal income tax and VAT, while the coefficient related to revenues from corporate income tax proved to be statistically insignificant.

scholarly journals The Relationship Between Direct Taxes and Economic Growth in Oecd Countries

2019 ◽  
Vol 57 (3) ◽  
pp. 273-286 ◽  
Author(s):  
Jadranka Đurović-Todorović ◽  
Ivan Milenković ◽  
Branimir Kalaš
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Income Tax ◽  
Oecd Countries ◽  
Personal Income ◽  
Corporate Income Tax ◽  
Domestic Product ◽  
Personal Income Tax ◽  
Tax Revenues ◽  
Gdp Growth Rate

AbstractThe aim of the paper is to identify a potential linear correlation between direct taxes and economic growth. The subject of the paper includes estimating the level and intensity of correlation between direct taxes and economic growth in OECD countries for the period 1996-2016. The study analyses tax forms such as personal income tax, corporate income tax and tax on property, and their potential relationship with economic growth, measured by GDP growth rate. Also, tax revenues growth has been included to determine whether it directly affects the economic growth in observed countries. The results of the group correlation matrix have shown that there is a statistically significant relationship between tax revenues growth, personal income tax, corporate income tax and gross domestic product in OECD countries. However, it is important to note that tax on property and gross domestic product are not significantly correlated at the OECD level, which is logical given the low share of this tax in those countries.

Does Accrual Basis Corporate Income Tax Information Reflect Economic Growth in South Korea?

2020 ◽  
Vol 25 (3) ◽  
pp. 27-47
Author(s):  
Sung－Whan Park ◽  
A－Young Lee ◽  
Do－Jin Jung ◽  
Hye－Jeong Nam
Keyword(s):  
Economic Growth ◽  
South Korea ◽  
Income Tax ◽  
Corporate Income Tax ◽  
Accrual Basis

scholarly journals Changes in taxation and their impact on economic growth in the European Union

2011 ◽  
Vol 59 (2) ◽  
pp. 325-332 ◽  
Author(s):  
Irena Szarowská
Keyword(s):  
Economic Growth ◽  
European Union ◽  
Income Tax ◽  
Corporate Income Tax ◽  
Gdp Growth ◽  
Panel Regression ◽  
The European Union ◽  
Gdp Growth Rate ◽  
Social Contribution ◽  
Negative Effect

The aim of the paper is to analyze changes in taxation and their impact on economic growth in the European Union. The analysis is performed on adjusted annual panel data of 24 European Union countries in a period 1995–2008. Panel regression with fixed effects is used as a basic method of research. The panel regression is based on analysis the effect of total tax quota changes on GDP growth in model 1, of changes in its components (social contribution, direct and indirect tax quotas) in model 2 and of personal and corporate income tax quota changes in model 3. Results of empirical tests verify statistically significant negative effect of tax burden on GDP growth. Total tax quota increased by 1% decreases the GDP growth rate by 0.29% in the same year. Estimations confirm a statistically significant negative effect of direct taxes on GDP growth as well. A cut in the direct tax quota by 1% raises the GDP growth rate by 0.43%. The model also presents a high negative impact of an increase in the corporate income tax quota on GDP growth (a value of the regression coefficient is minus 1.28%). The effect of social contribution quota on GDP growth is not statistically significant in any estimation.

scholarly journals REFORMING THE CORPORATE INCOME TAX IN THE CONTEXT OF ENSURING THE SUSTAINABILITY OF PUBLIC FINANCES

2018 ◽  
Vol 2018 (7) ◽  
pp. 46-58
Author(s):  
Inna LUNINA ◽  
◽  
Olena BILOUSOVA ◽  
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Income Tax ◽  
The State ◽  
Corporate Income Tax ◽  
Tax Base ◽  
Public Finances ◽  
Tax Revenues ◽  
Government Sector ◽  
High Level

To ensure the long-term sustainability of Ukraine’s public finances under conditions of a high level of public debt and significant payouts for its servicing, formation of prerequisites for economic growth and tax revenues of the state is required. The problem aspects of the corporate income tax in Ukraine are researched. Attention is focused on shortcomings of legal regulations of the tax base definition, which resulted in a significant reduction of budget revenues from corporate income tax, as well as their share in the total amount of revenues and mandatory payments of the general government sector (the state tax revenues) in 2014–2017. Based on the results of generalization of Estonia’s experience on use of the tax on withdrawn capital under conditions of Ukraine (when not the tax rates, but corruption and ineffective bureaucracy hinder economic growth), the authors conclude that the introduction of this tax is inexpedient. After all, the main consequence of such a reform of the corporate income tax will be growth of the budget deficit and public debt. According to the international experience, processes of reducing the corporate income tax accompany the unification of norms to form the corporate income tax base to prevent abuses and improve the efficiency of financial control. It is determined that the necessary prerequisites to ensure the sustainability of public finances in Ukraine are: (i) to counteract the evasion from payment of corporate income tax by establishing the legislative restrictions on the recording of expenses when determining the tax base for all taxpayers, and (ii) to simultaneously introduce tax incentives for research, development and innovation-investment activities of enterprises.

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