A Transparent Look at How Taxes Affect Growth: Evidence from Cross-Country Panel Data

A Transparent Look at How Taxes Affect Growth: Evidence from Cross-Country Panel Data | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article A Transparent Look at How Taxes Affect Growth: Evidence from Cross-Country Panel Data Laura Kawano, John Olson, Joel Slemrod, Meng Hsuan Hsieh This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4939899/v1 This work is licensed under a CC BY 4.0 License Status: Published Journal Publication published 13 Jul, 2025 Read the published version in International Tax and Public Finance → Version 1 posted 9 You are reading this latest preprint version Abstract We evaluate how different methodological choices affect the conclusions drawn about the effect of tax policy on economic growth using cross-country panel data. These analyses do not credibly support claims that tax rate changes have a statistically robust medium-term impact on national income. We then re-assess this literature in light of the recent econometric insights on estimation with staggered treatments, and find that a causal estimate of the effect of the first tax change again yields no statistically significant effect of taxes on economic growth. JEL Classification: H24, H25, E62, N10, O47 Tax rates Cross-country analysis Economic growth Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Published Journal Publication published 13 Jul, 2025 Read the published version in International Tax and Public Finance → Version 1 posted Editorial decision: Revision requested 16 Nov, 2024 Reviews received at journal 02 Nov, 2024 Reviews received at journal 23 Oct, 2024 Reviewers agreed at journal 15 Sep, 2024 Reviewers agreed at journal 11 Sep, 2024 Reviewers invited by journal 10 Sep, 2024 Editor assigned by journal 30 Aug, 2024 Submission checks completed at journal 20 Aug, 2024 First submitted to journal 19 Aug, 2024 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4939899","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":354319421,"identity":"5f8455f8-ec37-452f-ba26-d363abaa69e6","order_by":0,"name":"Laura Kawano","email":"","orcid":"","institution":"University of Michigan–Ann Arbor","correspondingAuthor":false,"submittingAuthor":false,"prefix":"","firstName":"Laura","middleName":"","lastName":"Kawano","suffix":""},{"id":354319422,"identity":"1bd43ed8-c8a3-44f4-a21f-33df03e1cfb4","order_by":1,"name":"John Olson","email":"","orcid":"","institution":"Northwestern University","correspondingAuthor":false,"submittingAuthor":false,"prefix":"","firstName":"John","middleName":"","lastName":"Olson","suffix":""},{"id":354319423,"identity":"a8c63cf5-f652-489a-84ce-7d30c223427d","order_by":2,"name":"Joel Slemrod","email":"","orcid":"","institution":"University of Michigan–Ann Arbor","correspondingAuthor":false,"submittingAuthor":false,"prefix":"","firstName":"Joel","middleName":"","lastName":"Slemrod","suffix":""},{"id":354319424,"identity":"45688a8b-393c-40b6-b6dd-fa64818ebd1b","order_by":3,"name":"Meng Hsuan Hsieh","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAyklEQVRIiWNgGAWjYHACNgYGA4YEfiDrAGMDiCRWi2QDaVoYGBIMQCqJ0mLe3mP28EeBTZ7xjezEAz93MMjx3UjAr0XmzLF0Yx6DtGKzG7kbDvaeYTCWJKRFQiL5mDSDweHEbUAthxnbGBI3ENQi/7BN8ofB/8TNMyBa6glrkWA+JsFjcCBxgwRES4IBQS08aWnSPAbJiTPOvAX6pU3CcOaZBwS0sJ8xk/zxxy6xvz1384efbTbyfMcJ2IJhBGnKR8EoGAWjYBRgBwDshkn+u5N+1gAAAABJRU5ErkJggg==","orcid":"","institution":"University of Michigan–Ann Arbor","correspondingAuthor":true,"submittingAuthor":false,"prefix":"","firstName":"Meng","middleName":"Hsuan","lastName":"Hsieh","suffix":""}],"badges":[],"createdAt":"2024-08-19 16:13:20","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-4939899/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4939899/v1","draftVersion":[],"editorialEvents":[{"content":"https://doi.org/10.1007/s10797-025-09901-z","type":"published","date":"2025-07-13T15:57:13+00:00"}],"editorialNote":"","failedWorkflow":false,"files":[{"id":86699483,"identity":"720ab6dc-69ee-491d-ba56-76a6a107dbd4","added_by":"auto","created_at":"2025-07-14 16:10:27","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":4117905,"visible":true,"origin":"","legend":"","description":"","filename":"KOSHITAXSubmission.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4939899/v1_covered_67962f2a-6675-4880-867b-32b76d1f2e20.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"\u003cp\u003eA Transparent Look at How Taxes Affect Growth: Evidence from Cross-Country Panel Data\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":true,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"international-tax-and-public-finance","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"itax","sideBox":"Learn more about [International Tax and Public Finance](http://link.springer.com/journal/10797)","snPcode":"10797","submissionUrl":"https://submission.nature.com/new-submission/10797/3","title":"International Tax and Public Finance","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"em","reportingPortfolio":"Springer Hybrid","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"Tax rates, Cross-country analysis, Economic growth","lastPublishedDoi":"10.21203/rs.3.rs-4939899/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4939899/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eWe evaluate how different methodological choices affect the conclusions drawn about the effect of tax policy on economic growth using cross-country panel data. 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