Thursday 4 August 2011

Chart of Tax Revenue versus GDP Growth - Is there an optimum?

The points have a lot of scatter.   If you agree about the outliers the author eliminates, the conclusion looks strong.            The author's summary:  
"So if you get rid of the outliers due to the recent recessions (the four numbered years) and the irrational exuberance of the dotcom boom, it’s pretty clear. Anybody who is proposing revenues in the 21% of GDP range (like, say, many of the Dems’ proposals), is likely to be suppressing annual GDP growth to well below 2%".
A valuable chart from MichaelsComments
Added:  Chronological chart of tax revenues as % of GDP. (Averages 18%)

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