The Comparative Empirical Analysis of the Impact of Tax Policies on the Country’s Economic Growth

Abstract

The article is aimed at determining the impact of tax policies on economic growth through a comparative empirical analysis of the tax burden and its structure in the European countries. The carried out cluster analysis of the economic growth rate, tax burden and labor income taxation in 20 European countries allowed to determine that: countries with medium-to-low economic growth rates have the highest level of tax burden and labor income taxation; countries with low economic growth rates are characterized by a tax system with relatively low tax burdens and high taxation of labor income; countries with medium-to-high economic growth are applying a high level of tax burdens with a moderate taxation of labor income; countries with high rates of economic growth form a tax system with little tax burden and income taxation. It has been proven that countries that are able to mobilize tax revenues through adaptive tax structures and instruments have a greater impact on the long-term growth rates.

Keywords

• empirical analysis
• tax policy
• economic growth
• tax structure
• tax burden