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Saturday, February 27, 2010

A Time for Choosing

A few minor changes aside, every word applies today.

Posted by Richard Anderson on February 27, 2010 | Permalink

Comments

Actually, his statement that no nation has survived a tax burden of more then 1/3 of national income does not bear out. In fact, Scandinavian countries exceed this measure by flying colours, and actually manage to eke out a balanced fiscal position.

Not that I'm advocating for high tax burdens, I'm certainly not. But clearly it takes more than a high tax burden to destroy a country.

Posted by: Mike Brock | 2010-03-01 12:53:19 PM


I guess he should have said prosper instead of survive

Posted by: Floyd Looney | 2010-03-01 2:40:42 PM


I think the truth is, that the more important factor is economic freedom in general. Most people have a very narrow view of economic freedom, thinking that economic freedom and taxation levels are a straight-forward inverse function.

Really, the story is much more complicated than that. Sweden actually has very high economic freedom after you get passed the taxation levels; there's no set minimum wage, their education vouchers for private schooling, property ownership is far more secure than in most of the rest of the developed world, etc.

Yet, the general view amongst say, conservatives, is that Sweden probably has among the least economic freedom in the world, simply due to it's taxation levels. But this doesn't seem to bear out upon full analysis, especially when you consider that most of Sweden's taxation is funnelled into direct-transfer, with "social services" being provided by the private sector. So tax dollars are less publicly directed, and more individually directed in Sweden than in other Western countries. This has a mitigating effect on the economic distortion.

As it turns out, the Swedish government consumers about 21% of the total GDP, which is lower than Canada (31.1%) and the US (30.4%).

So taxation levels tell a misleading story.

Posted by: Mike Brock | 2010-03-01 3:32:42 PM


Sweden has some other interesting statistics. 90% of their forests are privately owned by about 250,000 interests. Canada's forests are 11% privately owned (concentrated in the Maritimes). Its forest industry in consequently better off by any measure than their struggling Canadian counterparts.

I understand that Sweden's Nursing unions negotiated for and won private health care insurance.

And they can curl.

Who are the more socialist again?

Posted by: John Chittick | 2010-03-01 4:21:40 PM


Mike,

When Reagan gave the speech - in 1964 - the statement was probably true. I'd guess the threshold would be about 60% today (given the experience of Canada in the early 90s when it passed 50% for a brief period of time for all three levels of government combined).

You are quite right to point out that taxation is only part of the story in evaluating economic freedom. Sweden's corporate taxes are also quite low by international standards, it's personal tax rates that are higher.

On a broader point, the amount that governments can tax is related to their level of economic development. Pre-industrial governments consumed a very small portion of their economies wealth - perhaps less than 10% - but these economies were much closer to subsistence than ours. Ironically, the richer the economy the more statism it can "afford."

Posted by: Publius | 2010-03-01 4:57:15 PM


Sweden also has a higher level of education. The more educated the population is, the better the conditions are. Its a bit harder to BS the population there.

Posted by: Steve Bottrell | 2010-03-03 6:11:02 PM



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