Nonlinear tax structures and endogenous growth

The growth implications of a nonlinear tax structure are investigated. The interest here is on the distortionary not the redistributive effects of tax ation on economic growth. The study finds two results. First, the inclusion of a nonlinear tax structure into an Ak growth model introduces the conver gence behavior of the neoclassical growth model while retaining the steady- state growth properties of the Ak model, Second, a tax structure that is mo re progressive through time will lower the transitional growth rate and rai se the speed of convergence. Therefore, it is suggested that the tax struct ure may be another source of observed differences in per capita growth rate s.