Abstract:

The history of taxation in the last 45 years shows that labor and corporate profits are the most taxed across the world. The trend of decreasing Romania’s population is causing concern, given the correlation between demographics and tax revenue. This warning seems even more justified if we take into account that the population decrease is usually accompanied by structural imbalances (between generations, in particular) with consequences on multiple levels at macro and individual level. The purpose of this paper is to understand and analyze the impact of the aging population on the fiscal reality of Romania’s economy. In this context, the paper comprises certain clarifications in order to facilitate a better understanding of the relationship between the evolution of the total population and level of taxation. It also includes a brief overview of the main theories about the relationship between population and taxation, focusing on how changing age structure has become the central reference of theoretical and empirical research on this subject in the last decades.