On December 2 2018, Jacob Rees-Mogg tweeted “The tax burden is too high”. His assertion derived from an analysis of historical data undertaken by the Taxpayers’ Alliance (TPA) which had been commissioned by the Sunday Telegraph. The TPA reported that the tax to GDP ratio had reached a new high of 34.6%, breaking the previous high of 34.3% seen in the early 1960s.
What does “too high” mean?
It seems reasonable to assume that “too high” in this context means that the tax level is impeding GDP growth; it’s not easy to think of a second reason for tax to be too high. This made me wonder whether there is an objective basis for asserting that tax is too high and prompted me to investigate whether a link between a nation’s GDP and its tax level exists.
I chose the year 2016 (for which complete data exists), and…
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