Bruce Bartlett observes:
On May 24, the latest African Economic Outlook was published by the African Development Bank. A key finding is that African countries raise less in taxation than those elsewhere at similar stages of development, making African countries more dependent on foreign aid than necessary. (Note: almost every country in Africa has a low tax/GDP ratio. If low taxes were the primary key to growth then Africa would be far richer than it is.)
Gregory Clark makes a related point about Sweden versus Malawi.
The upshot to me isn’t that “taxes don’t matter” but rather that “quality of government matters a lot.” Compared to Africa, the American state is both gigantic, and incredible honest and incredibly efficient and that’s an excellent trade.
Previous in TP Yglesias
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