Tax burden and innovation effort

An important element of the economic policy debate is whether reducing the tax burden on companies or households leads to more innovation and technological progress. Some economists believe that reducing the tax burden is a necessary condition for obtaining innovation 1 ; others, on the contrary, claim that there was a lot of innovation in the 1950s, 1960s and 1970s, when the tax burden was much higher than today 2 . First, we look at developments in the United States, reminding us that the tax burden is not the only determinant of innovation (there is also competition in particular). We then compare OECD countries over the last 20 years. We see that there does not seem to be any significant link between the tax burden on the one hand, and spending on research, innovation or productivity gains on the other. 1 For example, S. Stantcheva, U. Akcigit, “Taxation and Innovation: What Do We Know? ”, NBER Working Paper 27109, 2020. 2 A thesis often defended by Thomas Piketty on the subject of the United States.