A very interesting, albeit not too rigorous (econometrically) exercise on the relationship between corporate tax rates and corporate tax revenues (the Laffer Curve):
Worth a read.
Top of the line conclusion: ex-Norway, "...at a 5% level of significance, the equation is significant, with a prob-value of 1.4%, and all but one of the coefficients are significant, and the coefficient on the squared term has a prob value of 11.6%. The signs all go the right way, and the intercept is near zero."
So: "It looks like there is some validity to the idea that as marginal corporate tax rates rise, so do corporate taxes as a percentage of GDP, until the taxes get too high. I didn’t test anything else. With both equations we learn two ideas:
- The tax take tops out at a 30% marginal rate
- You don’t give up much if you set the marginal rate at 20%"
Post a Comment