Economic Policy Reforms 2009
Going for Growth
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Taxation and Economic Growth
Tax systems differ widely across OECD countries and these variations explain part of the differences in economic performance and, in turn, differences in living standards. This chapter examines how to design tax systems to be less of a drag on economic growth. Corporate taxes are found to be the most harmful for growth, followed by personal income taxes, and then consumption taxes. Recurrent taxes on immovable property appear to have the least impact. A revenue neutral growthoriented tax reform would, therefore, be to shift part of the revenue base from income taxes to less distortive taxes such as recurrent taxes on immovable property or consumption.
Also available in: French
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