Empirical Economics

, Volume 46, Issue 3, pp 961–972

A revisit on the tax burden distribution and GDP growth: fresh evidence using a consistent nonparametric test for causality for the USA

Article

DOI: 10.1007/s00181-013-0706-5

Cite this article as:
Tiwari, A.K. & Mutascu, M. Empir Econ (2014) 46: 961. doi:10.1007/s00181-013-0706-5

Abstract

We revisited the evidence of Karagianni et al. (Int Rev Econ Fin 21:186–194, 2012) and Tiwari (Econ Bull 32:147–159, 2012) by employing a recently developed and more powerful nonlinear Granger-causality test proposed by Nishiyama et al. (J Econ 165:112–127, 2011) to investigate the existence of Granger-causality from a set of alternative tax burden (ratios) to GDP (per capita GDP), for the period 1947:q1–2009:q3 for the United States of America (USA). The nonlinear Granger-causality test provides strong evidence that personal current taxes and taxes on production and imports Granger-cause GDP and weak evidence that CR Granger-cause GDP. As a consequence, in order to influence (rebalance) the USA’s GDP through taxation, it is recommended to the USA government to adjust the tax structure, focusing on PCT and taxes on production and imports’ shocks. In this case, the tax policy is oriented especially on labour supply and investments.

Keywords

Tax burdenGDP growthDistributionNonparametric test causality

JEL Classification

C81H20O10

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Faculty of ManagementICFAI University TripuraSadarIndia
  2. 2.Faculty of Economics and Business AdministrationWest University of Timisoara TimisoaraRomania
  3. 3.Laboratoire d’Economie d’Orléans (LEO) UMR7322, Faculté de Droit d’Economie et de GestionUniversity of OrléansOrléansFrance