Effects of Corporate Tax on Economic Growth : The Case of Sweden

• Main Author: Forbin, James
• Format: Others
• Language: English
• Published: Internationella Handelshögskolan, Högskolan i Jönköping, IHH, Nationalekonomi 2012
• Subjects: Corporate tax; economic growth; distortions
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-17620

This paper examines the empirical effect of corporate Income tax on GDP growth rate using historical data from 1951-2010 for Sweden. Economic theory postulates that corporate tax rates should significantly negatively affect GPD growth rate. Some past empirical works on cross-country panel data also supports this significantly negative correlation between growth rate and corporate tax. However, empirical works using country specific time-series data show deviations and contradictions to this conventional wisdom. Using time series data, I find that corporate income tax rates have no significant effect on Swedish economic growth.