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Comment by yequalsx | Hacker News Reader

Here are some charts. I don't know how to make links in a comment.

http://paul.kedrosky.com/archives/2011/07/tax-burdens-around...

I'm not saying you're wrong because I don't know but you are over simplifying

First you're forgetting those countries don't have state taxes. For example, the top tax rate in California is close to 40% when you combine both State and Federal. Plus you have some cities that have income tax.

Second you're forgetting loop holes. Again the point I made above is U.S. citizens paid less in taxes when the U.S. tax rates were higher.

So again I can't say you're absolutely wrong. But you did over simplify (and you also ignored the point made in the very post you were supposedly replying to)

The chart says total tax burden so I'm assuming it takes into account state taxes. The one chart indicates an average for the U.S. of around 26%. This would be a 2% increase from what it is today. In a $10 trillion economy this would be a $200 billion tax increase. Given that borrowing rates are so low right now an awful lot of money can be borrowed before the budgetary burden reaches $200 billion in additional annual spending.

I responded to your post in another comment.

Total tax burden is a vague term. They could easily mean total Federal tax burden since they're comparing countries. This NY Times article pegs the total U.S. Federal tax burden at 20.7% which makes the numbers you quote seem dubious

http://economix.blogs.nytimes.com/2009/04/08/how-much-americ...

Tax burden is not a vague term. They define it in the charts. Total tax burden is the percent of GDP that is tax revenue. The link you gave talks about effective tax rate. This is very much different than the percent of GDP collected in taxes.

A question: how does the fact that these are revenues instead of rates play into this discussion? I.E., one of the arguments of free-market proponents is that lower tax rates can increase revenues by allowing the economy to grow-- which, if it were true for some or all of the economies, would actually undermine the point.

I'm genuinely curious about this, not trying to stir up a giant political debate.

I think it's quite bad to focus on rates. Given that there are usually loop holes and tax incentives it becomes necessary to look at tax burden as a percent of GDP.

The people who make the argument you mentioned are wrong. If lower taxes always lead to greater economic growth then the optimal tax burden would be 0%. But this would mean there is no government and we'd be in an anarchy. Does anyone really think an anarchy is the optimal way to grow an economy?

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