Effects of Income Tax on Capital Formation for the OECD

The present research focuses on analyzing how the basic tax burden such as income tax , has affected the gross capital formation of the countries belonging to the Organization for Economic Cooperation and Development (OECD) between the years 1998 to 2017, since this type of tax burden can be an obstacle or an incentive for the investment of economic agents. The FBC is an important factor of economic study as it represents an important percentage of the gross domestic product of the countries. It usually represents between 15% and 25% of total GDP. Fixed assets include land improvements; purchase of plant, machinery and equipment; and the construction of roads, railways and the like, including schools, offices, hospitals, private housing, and commercial and industrial buildings. Going back to the above, we realize that FBC has been a determining factor in measuring the performance of both developed and developing economies, since it measures investment in assets by economic agents such as households, financial corporations, non-financial corporations and the government.