Thursday, April 23, 2009

Pushing 40

As governments call for more and more of the individuals own wealth and income in the form of higher taxes, some general observations from OECD countries during the time period 2000 to 2007 help to illuminate:

Those governments which take 40% or more of GDP in the form of taxes, the average annual rate of total revenue growth to government = 5.18%

Those governments which take less than 40% of GDP in the form of taxes, the average annual rate of total revenue growth to government = 7.21%

Those governments which take 40% or more of an average worker's income in the form of taxes, the average annual rate of revenue growth to government = 4.91%

Those governments which take less than 40% of an average worker's income in the form of taxes, the average annual rate of revenue growth to government = 7.94%

Something about 40% (already penal) could be the fiscal equivalent of the Mendoza Line. Feel free to do your own fiddling with the data here, here and here. Any/all corrections welcome in the comments.