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The impact of tax structure on investment: an empirical assessment for OECD countries*
José Alves*
José Alves
Affiliation: ISEG/UL – Universidade de Lisboa, Department of Economics, Lisboa, Portugal ; REM – Research in Economics and Mathematics, UECE – Research Unit on Complexity and Economics (UECE is supported by FCT – Fundação para a Ciência e a Tecnologia, Portugal), Lisboa, Portugal
0000-0002-9979-7544
Correspondence
jalves@iseg.ulisboa.pt
Article | Year: 2019 | Pages: 291 - 309 | Volume: 43 | Issue: 3 Received: July 8, 2019 | Accepted: July 26, 2019 | Published online: September 14, 2019
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
realgdppc
|
taxinc
|
taxfirms
|
ssc
|
taxpayroll
|
taxprop
|
Mean
|
24.448
|
8.82
|
2.806
|
8.345
|
0.369
|
1.745
|
Std.
dev.
|
14.313
|
4.635
|
1.500
|
4.981
|
0.728
|
1.003
|
Max
|
101.054
|
26.78
|
12.594
|
19.173
|
5.661
|
7.334
|
Min
|
2.184
|
0.873
|
0.261
|
0.000
|
0.000
|
0.074
|
Obs.
|
1195
|
1106
|
1106
|
1137
|
1137
|
1137
|
|
taxvat
|
gfcf
|
gfcfgr
|
depositrate
|
ageratio
|
debt
|
Mean
|
10.588
|
23.161
|
3.314
|
9.253
|
51.287
|
55.728
|
Std.
dev.
|
3.046
|
4.091
|
8.917
|
25.364
|
6.931
|
35.901
|
Max
|
18.73
|
39.404
|
45.119
|
682.53
|
96.457
|
242.113
|
Min
|
2.979
|
11.546
|
-47.761
|
-0.18
|
36.323
|
3.664
|
Obs.
|
1137
|
1174
|
1164
|
1055
|
1260
|
943
|
|
foreigninvestment
|
rtfpna
|
totexp
|
pop
|
hconsggdp
|
outputgap
|
Mean
|
3.645
|
0.941
|
42.621
|
33.531
|
56.382
|
-0.319
|
Std.
dev.
|
10.487
|
0.123
|
9.657
|
52.235
|
7.069
|
2.850
|
Max
|
252.308
|
1.539
|
68.436
|
319.449
|
79.551
|
14.911
|
Min
|
-58.323
|
0.472
|
14.244
|
0.228
|
29.918
|
-11.437
|
Obs.
|
1120
|
1173
|
977
|
1173
|
1174
|
851
|
|
OLS
|
OLS-FE
|
GMM
|
RLS
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
(8)
|
Δrealgdppc
|
0.004***
|
0.003***
|
0.003***
|
0.003***
|
0.004***
|
0.005***
|
0.004***
|
0.004***
|
|
(0.000)
|
(0.000)
|
(0.001)
|
(0.001)
|
(0.001)
|
(0.001)
|
(0.000)
|
(0.000)
|
taxinc-1
|
-0.144**
|
-0.069
|
0.131
|
1.491**
|
-0.127
|
0.037
|
-0.128**
|
-0.182
|
|
(0.070)
|
(0.215)
|
(0.199)
|
(0.577)
|
(0.112)
|
(0.367)
|
(0.061)
|
(0.175)
|
taxinc2-1
|
|
-0.007
|
|
-0.070**
|
|
-0.015
|
|
-0.001
|
|
|
(0.009)
|
|
(0.031)
|
|
(0.017)
|
|
(0.008)
|
taxfirms-1
|
-0.442**
|
-1.580***
|
0.277
|
-0.595
|
-0.561***
|
-3.859***
|
-0.289**
|
-1.032**
|
|
(0.176)
|
(0.568)
|
(0.272)
|
(0.779)
|
(0.263)
|
(1.488)
|
(0.140)
|
(0.427)
|
taxfirms2-1
|
|
0.107**
|
|
0.070
|
|
0.279**
|
|
0.066*
|
|
|
(0.044)
|
|
(0.060)
|
|
(0.115)
|
|
(0.039)
|
ssc-1
|
-0.121**
|
-0.436**
|
-0.047
|
-2.007**
|
-0.151
|
-0.703
|
-0.086*
|
-0.276
|
|
(0.058)
|
(0.209)
|
(0.230)
|
(1.013)
|
(0.095)
|
(0.437)
|
(0.050)
|
(0.180)
|
ssc2-1
|
|
0.017
|
|
0.083**
|
|
0.028
|
|
0.010
|
|
|
(0.011)
|
|
(0.039)
|
|
(0.021)
|
|
(0.010)
|
taxpayroll-1
|
-0.324
|
0.420
|
1.990**
|
3.002
|
-0.065
|
-2.013
|
-0.284
|
0.107
|
|
(0.262)
|
(0.929)
|
(0.968)
|
(1.904)
|
(0.381)
|
(1.546)
|
(0.277)
|
(0.934)
|
taxpayroll2-1
|
|
-0.365
|
|
-0.304
|
|
0.729
|
|
-0.144
|
|
|
(0.356)
|
|
(0.540)
|
|
(0.682)
|
|
(0.383)
|
taxprop-1
|
-0.571*
|
-0.588
|
-0.211
|
0.775
|
-0.036
|
3.822
|
-0.013
|
1.139
|
|
(0.295)
|
(1.025)
|
(0.508)
|
(1.521)
|
(0.649)
|
(2.793)
|
(0.255)
|
(0.770)
|
taxprop2-1
|
|
0.042
|
|
-0.118
|
|
-0.658
|
|
-0.208
|
|
|
(0.166)
|
|
(0.214)
|
|
(0.443)
|
|
(0.141)
|
taxvat-1
|
-0.612***
|
-2.640***
|
0.413
|
0.291
|
-0.103
|
-2.691*
|
-0.663***
|
-1.982***
|
|
(0.163)
|
(0.635)
|
(0.363)
|
(1.127)
|
(0.3)
|
(1.519)
|
(0.133)
|
(0.538)
|
taxvat2-1
|
|
0.099***
|
|
0.016
|
|
0.111
|
|
0.066**
|
|
|
(0.033)
|
|
(0.057)
|
|
(0.072)
|
|
(0.026)
|
gfcf-1
|
-0.521***
|
-0.615***
|
-1.283***
|
-1.337***
|
-0.077
|
-0.340
|
-0.505***
|
-0.599***
|
|
(0.104)
|
(0.123)
|
(0.148)
|
(0.159)
|
(0.111)
|
(0.208)
|
(0.072)
|
(0.079)
|
gfcfgr-1
|
0.242***
|
0.242***
|
0.225***
|
0.221***
|
0.429**
|
0.267
|
0.259***
|
0.257***
|
|
(0.057)
|
(0.058)
|
(0.061)
|
(0.061)
|
(0.183)
|
(0.169)
|
(0.032)
|
(0.032)
|
Δdepositrate
|
-0.426*
|
-0.435*
|
-0.436*
|
-0.414*
|
1.063
|
-1.323
|
-0.583***
|
-0.606***
|
|
(0.241)
|
(0.238)
|
(0.256)
|
(0.251)
|
(1.233)
|
(1.526)
|
(0.160)
|
(0.159)
|
ageratio-1
|
-0.016
|
-0.053
|
-0.065
|
-0.029
|
-0.044
|
-0.029
|
-0.027
|
-0.058
|
|
(0.067)
|
(0.071)
|
(0.137)
|
(0.144)
|
(0.116)
|
(0.104)
|
(0.053)
|
(0.055)
|
Δdebt
|
-0.275***
|
-0.303***
|
-0.189**
|
-0.200**
|
-0.487*
|
-0.543**
|
-0.264***
|
-0.295***
|
|
(0.078)
|
(0.082)
|
(0.082)
|
(0.084)
|
(0.258)
|
(0.218)
|
(0.047)
|
(0.047)
|
rtfpna
|
-12.705***
|
-12.809***
|
-6.562
|
-2.947
|
2.829
|
-0.873
|
-10.328***
|
-10.345***
|
|
(3.769)
|
(3.884)
|
(5.536)
|
(6.308)
|
(4.246)
|
(5.567)
|
(2.677)
|
(2.770)
|
Δtotexp-1
|
-0.148
|
-0.160
|
-0.088
|
-0.081
|
0.315
|
-0.139
|
0.053
|
0.032
|
|
(0.159)
|
(0.163)
|
(0.154)
|
(0.157)
|
(0.654)
|
(0.602)
|
(0.104)
|
(0.104)
|
log(pop)
|
-0.497
|
-0.580
|
61.785***
|
63.702***
|
0.228
|
-0.501
|
-0.926***
|
-0.997***
|
|
(0.397)
|
(0.396)
|
(10.841)
|
(11.771)
|
(0.878)
|
(0.974)
|
(0.237)
|
(0.243)
|
foreigninvestment-1
|
-0.075***
|
-0.066***
|
-0.070***
|
-0.066***
|
0.028
|
0.009
|
-0.075***
|
-0.073***
|
|
(0.017)
|
(0.016)
|
(0.017)
|
(0.017)
|
(0.087)
|
(0.091)
|
(0.015)
|
(0.015)
|
hconsumption-1
|
0.039
|
0.013
|
-0.214**
|
-0.242**
|
0.07
|
0.000
|
0.036
|
0.024
|
|
(0.027)
|
(0.028)
|
(0.093)
|
(0.094)
|
(0.048)
|
(0.049)
|
(0.027)
|
(0.028)
|
outputgap
|
0.369**
|
0.466***
|
0.690***
|
0.736***
|
-0.849**
|
0.121
|
0.271***
|
0.352***
|
|
(0.157)
|
(0.157)
|
(0.159)
|
(0.170)
|
(0.395)
|
(0.565)
|
(0.091)
|
(0.093)
|
Tax thresholds
|
|
|
|
|
|
|
|
|
taxinc
|
-
|
-
|
-
|
10.65%
|
-
|
-
|
-
|
-
|
taxfirms
|
-
|
7.38%
|
-
|
-
|
-
|
6.92%
|
-
|
7.82%
|
ssc
|
-
|
-
|
-
|
12.09%
|
-
|
-
|
-
|
-
|
taxpayroll
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
taxprop
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
taxvat
|
-
|
13.33%
|
-
|
-
|
-
|
-
|
-
|
15.02%
|
R2
|
0.540
|
0.554
|
0.680
|
0.687
|
0.343
|
0.477
|
0.401
|
0.414
|
DW-Stat
|
1.856
|
1.875
|
2.000
|
2.018
|
2.110
|
1.949
|
n.a.
|
n.a.
|
Obs.
|
529
|
529
|
529
|
529
|
473
|
473
|
529
|
529
|
Notes: *, ** and *** represent statistical significance at levels of 10%, 5%, and 1% respectively. The robust standard errors are in brackets. The White diagonal covariance matrix is used in order to assume residual heteroskedasticity, with the exception of the RLS technique. The DW-statistic is the Durbin-Watson statistic. The non-bold and bold values express, respectively, maximum and minimum levels of optimal tax items.
|
OLS
|
OLS-FE
|
GMM
|
RLS
|
|
(9)
|
(10)
|
(11)
|
(12)
|
(13)
|
(14)
|
(15)
|
(16)
|
Δrealgdppc
|
0.000**
|
0.000**
|
0.003***
|
0.001**
|
0.004***
|
0.001**
|
0.004***
|
0.000*
|
|
(0.000)
|
(0.000)
|
(0.001)
|
(0.000)
|
(0.001)
|
(0.000)
|
(0.000)
|
(0.000)
|
taxinc-1
|
-0.042
|
-0.085
|
0.131
|
0.740
|
-0.127
|
-0.263
|
-0.128**
|
0.021
|
|
(0.051)
|
(0.091)
|
(0.199)
|
(0.571)
|
(0.112)
|
(0.169)
|
(0.061)
|
(0.114)
|
taxinc2-1
|
|
0.003
|
|
-0.042
|
|
0.012*
|
|
-0.004
|
|
|
(0.004)
|
|
(0.029)
|
|
(0.007)
|
|
(0.005)
|
taxfirms-1
|
-0.098
|
-0.197
|
0.277
|
0.489
|
-0.561**
|
-0.601
|
-0.289**
|
-0.828***
|
|
(0.107)
|
(0.458)
|
(0.272)
|
(0.747)
|
(0.263)
|
(0.734)
|
(0.140)
|
(0.278)
|
taxfirms2-1
|
|
0.014
|
|
-0.028
|
|
0.041
|
|
0.066***
|
|
|
(0.034)
|
|
(0.053)
|
|
(0.055)
|
|
(0.025)
|
ssc-1
|
-0.069**
|
-0.227**
|
-0.047
|
-0.417
|
-0.151
|
-0.150
|
-0.086*
|
-0.255**
|
|
(0.034)
|
(0.091)
|
(0.230)
|
(0.662)
|
(0.095)
|
(0.172)
|
(0.050)
|
(0.117)
|
ssc2-1
|
|
0.010*
|
|
0.008
|
|
0.006
|
|
0.009
|
|
|
(0.005)
|
|
(0.023)
|
|
(0.010)
|
|
(0.006)
|
taxpayroll-1
|
-0.168
|
0.170
|
1.990**
|
1.156
|
-0.065
|
0.221
|
-0.284
|
-0.164
|
|
(0.160)
|
(0.490)
|
(0.968)
|
(1.352)
|
(0.381)
|
(0.986)
|
(0.277)
|
(0.608)
|
taxpayroll2-1
|
|
-0.215
|
|
-0.467
|
|
-0.334
|
|
-0.044
|
|
|
(0.185)
|
|
(0.503)
|
|
(0.415)
|
|
(0.249)
|
taxprop-1
|
-0.258
|
-0.971
|
-0.211
|
-0.816
|
-0.036
|
-1.381
|
-0.013
|
0.447
|
|
(0.181)
|
(0.868)
|
(0.508)
|
(1.838)
|
(0.649)
|
(1.260)
|
(0.255)
|
(0.501)
|
taxprop2-1
|
|
0.137
|
|
0.122
|
|
0.190
|
|
-0.052
|
|
|
(0.124)
|
|
(0.219)
|
|
(0.198)
|
|
(0.092)
|
taxvat-1
|
-0.271**
|
-0.183
|
0.413
|
1.985***
|
-0.103
|
0.298
|
-0.663***
|
-0.499
|
|
(0.109)
|
(0.397)
|
(0.363)
|
(0.571)
|
(0.300)
|
(0.853)
|
(0.133)
|
(0.350)
|
taxvat2-1
|
|
-0.007
|
|
-0.108***
|
|
-0.040
|
|
0.022
|
|
|
(0.021)
|
|
(0.029)
|
|
(0.035)
|
|
(0.017)
|
gfcf-1
|
-0.114*
|
-0.100
|
-1.283***
|
-0.259***
|
-0.077
|
0.096
|
-0.505***
|
-0.083
|
|
(0.062)
|
(0.069)
|
(0.148)
|
(0.091)
|
(0.111)
|
(0.115)
|
(0.072)
|
(0.052)
|
gfcfgr-1
|
0.274***
|
0.267***
|
0.225***
|
0.214***
|
0.429**
|
0.265***
|
0.259***
|
0.292***
|
|
(0.034)
|
(0.036)
|
(0.061)
|
(0.036)
|
(0.183)
|
(0.100)
|
(0.032)
|
(0.021)
|
Δdepositrate
|
-0.648***
|
-0.644***
|
-0.436*
|
-0.468***
|
1.063
|
-0.388
|
-0.583***
|
-0.573***
|
|
(0.124)
|
(0.191)
|
(0.256)
|
(0.131)
|
(1.233)
|
(0.815)
|
(0.160)
|
(0.104)
|
ageratio-1
|
-0.064
|
-0.053
|
-0.065
|
-0.052
|
-0.044
|
0.089**
|
-0.027
|
-0.071**
|
|
(0.040)
|
(0.032)
|
(0.137)
|
(0.112)
|
(0.116)
|
(0.045)
|
(0.053)
|
(0.036)
|
Δdebt
|
-0.239***
|
-0.238***
|
-0.189**
|
-0.150***
|
-0.487*
|
-0.631***
|
-0.264***
|
-0.245***
|
|
(0.050)
|
(0.057)
|
(0.082)
|
(0.041)
|
(0.258)
|
(0.124)
|
(0.047)
|
(0.031)
|
rtfpna
|
-4.849**
|
-4.240*
|
-6.562
|
0.082
|
2.829
|
1.089
|
-10.328***
|
-4.070**
|
|
(2.074)
|
(2.551)
|
(5.536)
|
(4.644)
|
(4.246)
|
(3.229)
|
(2.677)
|
(1.803)
|
Δtotexp-1
|
-0.046
|
-0.050
|
-0.088
|
0.002
|
0.315
|
0.517
|
0.053
|
-0.125*
|
|
(0.091)
|
(0.077)
|
(0.154)
|
(0.079)
|
(0.654)
|
(0.327)
|
(0.104)
|
(0.068)
|
log(pop)
|
-0.436**
|
-0.421
|
61.785***
|
14.650**
|
0.228
|
-0.203
|
-0.926***
|
-0.415***
|
|
(0.189)
|
(0.299)
|
(10.841)
|
(7.225)
|
(0.878)
|
(0.391)
|
(0.237)
|
(0.158)
|
foreigninvestment-1
|
-0.004
|
-0.002
|
-0.070***
|
-0.006
|
0.028
|
0.044
|
-0.075***
|
-0.003
|
|
(0.007)
|
(0.006)
|
(0.017)
|
(0.009)
|
(0.087)
|
(0.047)
|
(0.015)
|
(0.010)
|
hconsumption-1
|
0.056***
|
0.053***
|
-0.214**
|
-0.093
|
0.070
|
0.057**
|
0.036
|
0.026
|
|
(0.018)
|
(0.018)
|
(0.093)
|
(0.102)
|
(0.048)
|
(0.028)
|
(0.027)
|
(0.018)
|
outputgap
|
-0.144*
|
-0.138
|
0.690***
|
-0.085
|
-0.849**
|
-0.433
|
0.271***
|
-0.214***
|
|
(0.083)
|
(0.103)
|
(0.159)
|
(0.091)
|
(0.395)
|
(0.312)
|
(0.091)
|
(0.061)
|
Tax
thresholds
|
|
|
|
|
|
|
|
|
taxinc
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
taxfirms
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
6.27%
|
ssc
|
-
|
11.35%
|
-
|
-
|
-
|
-
|
-
|
-
|
taxpayroll
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
taxprop
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
taxvat
|
-
|
-
|
-
|
9.19%
|
-
|
-
|
-
|
-
|
R2
|
0.476
|
0.481
|
0.717
|
0.730
|
0.171
|
0.180
|
0.360
|
0.366
|
DW-Stat
|
1.124
|
1.127
|
1.034
|
1.095
|
1.692
|
1.665
|
n.a.
|
n.a.
|
Obs.
|
529
|
529
|
529
|
529
|
473
|
| |