Is corporation tax good or bad for growth?

Governments need to think about both designing a tax system that supports investment and about the total tax burden borne by business.

Corporate tax rates have fallen from the high 40s-50 percent in the 1980s to 21.4 percent in 2018, according to the OECD, which studied 88 countries. This is driven partly by the belief that lower rates encourage inward investment and enterprise generally. Research, such as the IMF Working Paper “Death and Taxes: Does Taxation Matter for Firm Survival”, also shows that the higher the effective marginal tax rate, the greater the chance of a company failing financially.Nevertheless, while rates...

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Authors: Jane McCormick, Chris Morgan

Published Date: 17 January 2020