TY  - JOUR
AU  - Engen,Eric M.
AU  - Skinner,Jonathan
TI  - Taxation and Economic Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5826
PY  - 1996
Y2  - November 1996
UR  - http://www.nber.org/papers/w5826
L1  - http://www.nber.org/papers/w5826.pdf
N1  - Author contact info:
Eric M. Engen
American Enterprise Institute
1150 Seventeenth Street, NW
Washington, DC 20036
Tel: 202/862-5837
Fax: 202/862-7177
E-Mail: eric.m.engen@frb.gov

Jonathan S. Skinner
Department of Economics
6106 Rockefeller Hall
Dartmouth College
Hanover, NH 03755
Tel: 603/646-2535
Fax: 603/646-2122
E-Mail: jonathan.skinner@dartmouth.edu
M2  - featured in NBER digest on 1997-06-01
AB  - Tax reforms are sometimes touted to have strong macroeconomic growth effects.  We consider the impact of a major tax reform on the long-term growth rates of the U.S. economy using three approaches.  The first approach is to examine the historical record of the U.S. economy to evaluate whether tax cuts have been associated with economic growth.  The second is to consider the evidence on taxation and growth for a large sample of countries. And finally, we use evidence from micro-level studies of labor supply, investment demand, and productivity growth.  Our results suggest modest effects, on the order of 0.2 to 0.3 percentage point differences in growth rates in response to a major tax reform that changes all marginal tax rates by 5 percentage points and average tax rates by 2.5 percentage points.  Nevertheless, even such small effects can have a large cumulative impact on living standards.
ER  -