Monday, May 23, 2011

Data on Taxation and Economic Growth

Here is a bit from an excellent post by Lane Kenworthy showing that the high tax socialist economies of Scandanavia are just as vibrant as the US while being far better in terms of social justice with economic opportunity for the bottom 90% of the population:
Half a century ago, in 1960, taxes totaled about a quarter of GDP in Denmark, Sweden, and the United States. The tax take then began to rise in Denmark and Sweden, reaching half of GDP by the mid-1980s, where it has remained. In America it has barely budged, hovering between 25% and 30% of GDP throughout the past five decades.


Begin with GDP per capita. America’s is higher than Denmark’s or Sweden’s. But that’s a legacy of the distant past. Growth of per capita GDP in the three countries has been virtually identical, both in the five decades since 1960 when the divergence in tax levels began and in the three decades since the 1970s (shown in the chart) when the tax difference has been most pronounced.

... employed Danes and Swedes tend to work fewer hours than employed Americans — about 1,600 per year versus 1,800. This is due in large part to the fact that Danes and Swedes have more than five weeks of legally-mandated paid vacations and holidays, whereas Americans have none. This gap, in turn, is a function of historical differences in the strength of unions.

... the U.S. has not gained ground in recent decades. Household incomes in the middle of the distribution have grown more rapidly in Denmark and Sweden than in the U.S. (shown in the chart), and at the ninetieth percentile they’ve increased at about the same pace.


Have high taxes required a sacrifice of liberty? Not according to the Freedom House measure of civil liberties or the Heritage Foundation-Wall St. Journal measure of economic freedom.

Finally, consider two social indicators of well-being: life expectancy and life satisfaction. On both counts, Danes and Swedes fare, on average, just as well as or better than their American counterparts.
Go read the original post because it has excellent graphs that illustrate the points being made.

The propaganda of the political right in the US permeates the society and puts fear into people that if they don't keep lowering taxes for the billionaires and millionaires then the economy will shrivel up and topple over, that their freedoms will turn into chains, and that everybody's health will go to hell in a handbasket. All lies. All propaganda to keep the US on its current path of a new Gilded Age.

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