COMMENT: In the real world high taxes restrict economic growth

September 27, 2012 11:50 AM

Writing for City A.M. Matthew Sinclair points out that higher taxes and higher spending are associated with weaker economic growth.
HIGHER taxes and higher spending are associated with weaker economic growth. That is the clear conclusion of a wealth of increasingly sophisticated studies conducted over decades.

The final report of our 2020 Tax Commission summarised 18 studies from the 1970s, which found higher spending or higher taxes diminished the level or growth of national income. From David B Smith’s 1975 paper, Public Consumption and Economic Performance, which looks at 19 industrialised countries over the period 1961 to 1972; to António Afonso and Joao Jalles’s 2011 paper, Public Sector Efficiency, which studies 145 countries over the period 1960-2007.

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Writing for City A.M. Matthew Sinclair points out that higher taxes and higher spending are associated with weaker economic growth.
HIGHER taxes and higher spending are associated with weaker economic growth. That is the clear conclusion of a wealth of increasingly sophisticated studies conducted over decades.

The final report of our 2020 Tax Commission summarised 18 studies from the 1970s, which found higher spending or higher taxes diminished the level or growth of national income. From David B Smith’s 1975 paper, Public Consumption and Economic Performance, which looks at 19 industrialised countries over the period 1961 to 1972; to António Afonso and Joao Jalles’s 2011 paper, Public Sector Efficiency, which studies 145 countries over the period 1960-2007.

Click here to continue reading the full article

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