Hilary Clinton today amazingly argued that countries with the highest tax-to-GDP ratio are healthy. Responding to a question, she remarked,
Let’s talk economics. It is unclear how Clinton could infer anything from tax-to-GDP ratio because the amount of revenue a government has is entirely contingent on a particular countries resources, ideology, historical forces, social forces, and so on. For this reason, different governments have vastly different constituent revenue components and therefore to make a generalization about the relationship between tax and GDP is simply not possible. For example, if one country counts sales of oil as tax revenue and another does not, then no clear comparison can be made between the two with regard to a tax-to-GDP ratio.
There are other reasons why Secretary Clinton cannot make the judgment she is making but they all boil down to the same thing: economics says nothing about tax-to-GDP ratio. However, economics does say something about taxes in general. When a government taxes heavily, it stifles economic growth because why would entrepreneurs risk their livelihoods if their fruits are going to be appropriated by a central bureaucrat? This is one well-established economic relationship, Secretary Clinton. Try opening an economics 101 textbook sometime.
What is really implicit in Clinton’s remark is her ideological fixation on the idea of redistribution by the government. Economic science has repeatedly affirmed that meddling by the government simply introduces distortions into the market and leads to a less efficient distribution of resources.
By the way, Secretary Clinton, Brazil doesn’t have the highest tax-to-GDP ratio in the western hemisphere. Guess who does? Cuba.
Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what — it's growing like crazy. And the rich are getting richer, but they're pulling people out of poverty. There is a certain formula there that used to work for us until we abandoned it, to our regret in my opinion.With all due respect, Secretary Clinton, your opinion is just plain wrong.
Let’s talk economics. It is unclear how Clinton could infer anything from tax-to-GDP ratio because the amount of revenue a government has is entirely contingent on a particular countries resources, ideology, historical forces, social forces, and so on. For this reason, different governments have vastly different constituent revenue components and therefore to make a generalization about the relationship between tax and GDP is simply not possible. For example, if one country counts sales of oil as tax revenue and another does not, then no clear comparison can be made between the two with regard to a tax-to-GDP ratio.
There are other reasons why Secretary Clinton cannot make the judgment she is making but they all boil down to the same thing: economics says nothing about tax-to-GDP ratio. However, economics does say something about taxes in general. When a government taxes heavily, it stifles economic growth because why would entrepreneurs risk their livelihoods if their fruits are going to be appropriated by a central bureaucrat? This is one well-established economic relationship, Secretary Clinton. Try opening an economics 101 textbook sometime.
What is really implicit in Clinton’s remark is her ideological fixation on the idea of redistribution by the government. Economic science has repeatedly affirmed that meddling by the government simply introduces distortions into the market and leads to a less efficient distribution of resources.
By the way, Secretary Clinton, Brazil doesn’t have the highest tax-to-GDP ratio in the western hemisphere. Guess who does? Cuba.
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