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Global corporate tax policy space

Author

Listed:
  • Kenc, Turalay
  • Cevik, Emrah Ismail
Abstract
This study investigates the economic growth implications of ongoing and prospective rises in corporate tax rates following G20 countries’ minimum corporation tax agreement. We use a panel data estimation approach to examine economic growth rates and associated macro-economic variables of 42 nations from 1990 to 2017. To elicit more comprehensive insights, we make a distinction between advanced countries (ACs) and emerging market economies (EMEs) and different levels of growth using a quantile estimation approach. The results reveal that corporate tax rate rises depress growth, with a relatively sizeable impact for EMEs, whereas it is not statistically significant for ACs. At high quantiles of growth rates, the impact of the corporate tax policy on growth increases. These findings suggest a dual effect for EMEs with relatively high growth rates and symmetric growth effects of corporate tax changes, necessitating innovative policy prescriptions to address the negative growth impact of prospective higher corporate tax rates.

Suggested Citation

  • Kenc, Turalay & Cevik, Emrah Ismail, 2024. "Global corporate tax policy space," Economic Systems, Elsevier, vol. 48(2).
    • Handle: RePEc:eee:ecosys:v:48:y:2024:i:2:s0939362524000190
    DOI: 10.1016/j.ecosys.2024.101197
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate taxation; Economic growth; Quantile estimation; Panel data estimation;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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