Historical analysis of the relationship between taxation and economic development: Example of Germany, England and France

The relationship between taxation and economic development has become an issue that states pay attention to, especially in the competition for economic development that has increased with globalization. Although many empirical studies have been conducted on the existence of this relationship, there is still an ongoing debate in the literature. Different variables and samples used in the studies have led to different results on the relationship in question. Because the existence of many variables affecting the real economy makes it difficult to reach a definite conclusion on the subject. For this reason, in this study, rather than empirical analysis; Different variables that may affect economic growth, such as political factors affecting tax policies, productivity of production factors, technical progress, level of competition in the economy, taxpayers' attitude towards taxation and welfare programs have been analyzed historically, and if these variables provide the necessary conditions for economic growth, taxation has been concluded that it can affect the development positively. In the study, the relationship between taxation and economic development is made for the economically developed countries such as England, France and Germany. Especially in the period described as the "Golden Age" between 1950-70, these countries achieved rapid economic growth rates. At the end of the study, Britain's failure to take the lead in economic growth rates; The insufficiency of the manufacturing sector has been associated with the spread of welfare programs and low investment rates. Incentive policies implemented between 1948-55 were shown as the reason for recording high economic growth rates during the Golden Age in Germany. For France, it was concluded that the VAT reform positively affected economic growth by providing tax incentives to key sectors that could provide growth in the golden age, while some tax policies had negative effects on economic growth. As a result, it is concluded that more economic development will be achieved if growth-oriented tax policies are implemented in all three developed countries studied.