Chris Edwards posts the following in a post asking “How Big is American Government?”
I think the more you think about it the less sense it makes to make the overall level of taxation such a signpost of big government or lack thereof. When you think about it, one of the biggest government interventions into the American economy is the absence of a tax in the form of the home mortgage interest deduction. That has a substantial impact on the flow of huge sums of money. And as we’ve been saying, an individual mandate to buy health insurance (or, indeed, an employer mandate to buy insurance for employees) wouldn’t really be a tax but it would certainly be an important government intervention into the economy. Or if you think about Germany, the restrictions on layoffs are probably a more noteworthy form of “big government” than the tax rate.