Tax composition and economic growth in the age of demographic change

Bibliographic Data

ID11193280
AuthorsWeijie Luo (0000-0002-6530-1897, Central University of Finance and Economics, corresponding author)
Year2023
Volume44
Issue6
Pages786-805
Publication date2023-11-02
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenuePolicy Studies (JOURNAL)
Journal identifiersISSN: 0144-2872 • E-ISSN: 1470-1006
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/01442872.2022.2096212
OpenAlexW4288074823
LanguageEN
Citations received2
References cited40

This study analyses the impact of the relative use of distortionary and non-distortionary taxes on economic growth using a panel of Organisation for Economic Co-operation and Development (OECD) countries and a sample period of 1980–2015. In particular, we examine whether the impact of non-distortionary taxes on economic growth increases with ageing, which has increased in western countries over the past 30 years. We do so by extending the dataset to include the dramatic change in the demographic structure seen in OECD countries since 1990. Using this lengthened data range allows us to find a negative effect of distortionary taxation as expected. However, our results also show that an increase in non-distortionary taxation is negatively associated with growth. This study thus argues that recent distortions from non-distortionary taxation can be accounted for by the rapid ageing of the population. Ideal tax systems are often formulated by economists, but politicians cannot always adopt such an ideal tax design because of the risk of losing popularity with the electorate. Our analysis could be applied to design tax systems that can be implemented in the real world

Demographic change · Demographic economics · Econometrics · Economics · Ideal (ethics · Panel data · Popularity · Population · Population ageing · Sample (material · Corporate Taxation and Avoidance · Demography · Fiscal Policy and Economic Growth · Taxation and Compliance Studies

Tools

Open DOI