taxation as enforced savings for society.

 

Tim Colebatch in the Age points to a paper presented by a certain Neil Brooks who argues that; 

“Countries with high taxes tend to have significantly better social outcomes than those with low taxes and their economies appear to be largely unaffected by the required higher taxes.�

Countries with lower tax rates (such as the Anglo posse) have maintained higher growth rates through budget deficits (in essence, deferred taxation) and diminshing private savings (spending now rather than later). This is only partly applicable to Australia, because we have been running budget surpluses (projected at $8.8bn for 2005/06 this year, to be handed back to marginal electors next year).

In terms of labour market effects, Brooks argues that;

“Far from high tax rates deterring work, [the high-tax Scandinavian] workforce participation rates are the highest in the world, especially for women. They invest far more in research and development. In national income per head, the World Bank ranks all five Scandinavian countries in the world’s top 20.â€?

I can’t find it at the moment, but would be interested in having a look at that paper.