Home > Main > Taxes as a percent of GDP now nearly 17%!

Taxes as a percent of GDP now nearly 17%!

December 8, 2010

As they have been for the last 60 years or so.  This remarkable chart from Steven Culp via Felix Salmon at Reuters shows that the more things change, the more they stay the same.

There has been little change in the overall level of taxes collected in the U.S., relative to GDP.   But within that magic 15-20% band, who is paying the taxes and what is taxed has changed dramatically.  And it appears to explain many of the changes in the U.S. economy over the last 40 years.

Wonder why the U.S. has had problems creating jobs the last 30 years?  Taxes on work went up dramatically.  Why is the middle class feeling poor?  Their taxes went up dramatically.  Estate taxes are way down – so wealth concentration is way up.  Why is the corporate state so much larger?  Corporate taxes are way down.

Taxes are weak short term incentives.  If my tax rate were to go up to 50%, I would not work less.  But if it went up to 50% for the next decade, I would look to change what I was doing to reduce my tax burden.   Taxes are weak, but persistent workers on incentives.

That is why these 10 points from Stiglitz are so useful. We need to remind ourselves again and again and again we should not be taxing work, but pollution.

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