Relationship between Tax Rate and Tax Revenue: A Panel Threshold Regression Analysis for the OECD Countries


Daşdemir S., Konukcu Önal D.

Vergi Raporu, no.247, pp.135-149, 2020 (Peer-Reviewed Journal)

  • Publication Type: Article / Article
  • Publication Date: 2020
  • Journal Name: Vergi Raporu
  • Journal Indexes: TR DİZİN (ULAKBİM)
  • Page Numbers: pp.135-149

Abstract

The leading fiscal goal of all nations in theworld is to collect government revenues atoptimal levels. Most of the government revenuesare obtained through taxes. Governments have toconduct sound tax policies and make necessarychanges to increase tax compliance due to thedifficulties of tax collection faced. In this context,one of the major concerns of policy makersis to set tax rates so that tax compliance andtax revenues are affected positively. This studyinvestigates the relationship between incomeand corporate tax rates and tax revenues forthirty-five member countries of the Organisationfor Economic Co-operation and Development(OECD) for the period between 2000 and 2015.This empirical investigation, which is based onpanel regression estimations, points out that theeffect of tax rates on tax revenues can vary with respect to development levels and structuralcharacteristics of countries. These variationsare observed through estimates of thresholdvalues, which are reflected by some structuralcharacteristics of countries, such as, per capitaincome, human development index, informaleconomy share and agricultural employment rate.