Denmark, Finland, Norway and Sweden follow the “social welfare” system of government and have a the tax burden of 52% of their national income; Austria, Belgium, France, Germany, Italy and Netherlands follow the “mixed economy” system and have a tax burden of 49%; while Australia, Canada, Ireland, New Zealand, United Kingdom and United States follow the “free market” system of government and their tax burden is 38% of the national income.
The first two groups of countries enjoy higher levels of income, lower rates of poverty and a more equal distribution of wealth. This is very powerful evidence of the advantages of an extensive social-welfare state or mixed economy systems. These two groups also have low corruption and high public trust in government institutions.
The World Economic Forum rates the first two groups higher in international competitiveness. They achieve balanced budgets, despite the large social outlays, because the high outlay is matched by adequate taxation.
The above statistics have been the same for 30 years. UK has managed lower taxes, but at the expense of a cumulative budget deficit of 150% of GDP including public private partnership debts and a consumer debt of 150% of GDP on top.
What is better? Raise the right amount of tax annually or accumulate deficits indefinitely?
Nagindas Khajuria
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