Lane Kenworthy has posted an excellent write-up on whether high tax levels affect GDP. He walks through a comparison of the United Stats vs Denmark vs Sweden and observed that, despite higher tax levels in Denmark and Sweden, the countries have very similar metrics on economic growth.
Lane sums up with:
At what point does the harmful impact of taxes on the economy kick in? And how large is it? The Danish and Swedish experiences over the past generation pose a challenge for those who believe the answers to these two questions are “somewhere below 50% of GDP” and “large.” It’s a challenge that in my view has yet to be met.
I take no position on tax policy other than there is absolutely zero data being injected into the conversations happening in Congress right now. Any battle being fought on dogmatic terms instead of with data is doomed from the get-go.
Hat tip to Economist’s View