Growth versus taxation

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Shrill Europhobic EU Rota has some tables on overall tax taxes across Europe. Tim Worstall wonders what this looks like when cross-referenced with growth rates; I’m happy to oblige:

Not terribly conclusive, although going for a tax rate much above 45% seems like a marginally worse strategy than going for one much below it.

Alternatively, the data can be displayed in a bubble chart that also shows GDP per capita:

Again, it proves roughly sod-all, except that people who believe there’s a strong positive correlation between growth and small government have a tough explanation job on their hands…

(tax takes sourced from EU Rota. 03/04 GDP growth sourced from local statistics offices, IMF, UN. Only 19 countries are included, since I didn’t have GDP data to hand for Cyprus, Estonia, Latvia, Lithuania, Luxembourg or Malta. Cyprus, Luxembourg and Malta would all appear in the 40-45 government spending cluster; the Baltics are slightly lower).

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12 thoughts on “Growth versus taxation”

  1. any way of doing this as a bubble chart with the $ amount of GDP as the size of the bubble?

  4. You want GDP absolute? Don’t see that showing much (Netherlands and Poland have similar absolute GDPs, but this doesn’t say much about their respective economic circumstances…)

  5. Well, the interesting thing about the top graph is the fact that there are two groups and a gap between them. Is there any commonality to the members of the two groups?

  6. I thought that might be what Dan wanted, but I was just enjoying the fact we can get you to do charts for us.

    I would also have thought perhaps 2000-2005 average growth rate would be better if your afternoon is free.

  7. I wanted to see if the high-growth countries were dominated by small East European states (and seeing where Germany was)

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