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Abstract
One of the most debated questions in economy is the relationship between tax rates and eco- nomic 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 rela- tionship 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 neoclas- sical growth model extended with human capital. Furthermore, the model associated with the variable reflecting the different possibilities to measure the tax burden on corporations, espe - cially 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.
Highlights
In the present time most countries try to cope with the consequences of global economic crisis
Since this work is fundamentally focused on the impact of corporate tax burden on economic growth and long-term causality of variables (CAP, POP, human capital (HUM)) on growth has been empirically demonstrated in almost all studies that deal with this issue, the results presented here are focused only on the variables with a tax nature
The aim of this paper was to verify the existence of negative impact of corporate taxation at long-term economic growth, especially for the different types of measurement of effective tax burden (EATR, effective marginal tax rate (EMTR), implicit tax rate on capital (ITRC), TQC), which are not so often used in the empirical works
Summary
In the present time most countries try to cope with the consequences of global economic crisis. The European Union (EU) is facing to the other problem – budget crisis which has its origin in the budgetary discipline mostly of the southern countries – but its impact is area-wided and is alarming especially for the member countries of the monetary union. This situation has raised several questions which need to be dealt as quickly as possible. A fundamental issue is how to set up the system for the best support of economic growth and simultaneously to keep budgetary discipline and lower budget deficits In this area is the most often mentioned the idea of the introduction of common EU fiscal rules and fiscal responsibility. The reference period is the annual rate over the period from 1998 – 2010
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