Types of Taxes and Economic Growth

The OECD has recently come out with a new report that is an absolute gift for tax policy nerds like me. A PDF of the report Tax and Economic Growth is available here (PDF). The Tax Foundation summarizes as follows:

In a blockbuster new study titled "Tax and Economic Growth," economists at the Organization for International Cooperation and Development studied the effects of various types of taxes on the economic growth of developed nations within the OECD and found that "corporate taxes are found to be most harmful for growth, followed by personal income taxes, and then consumption taxes."

This should not be surprising, as these are similar to other marginal efficiency cost tax studies. Once again it shows that lowering income taxes and raising gas taxes could be beneficial, even if it does nothing for the environment. One result that should please Henry George fans is that reducing income taxes through an off-setting unimproved land value tax could also benefit the economy:

A shift towards taxes on property appears to be even better for growth than a shift towards consumption taxes and has the added advantage that it would be less likely to raise equity concerns. The discussion... suggests that the best form of the shift would be towards recurrent taxes on immovable property as this is the least distortionary type of property tax. Nonetheless, there are two practical drawbacks to a significant shift towards greater taxation of immovable property. First, these taxes are very unpopular in many countries, at least in part because of their visibility... The second practical drawback is that, in most OECD countries, property tax revenues belong to local governments and so a shift towards property taxes would require some changes to the revenue sharing arrangements.

Reading the whole paper is probably overkill unless you are really into tax policy - the summary gives enough of the basics.