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> Not if it involves some obscure tribe in the Amazonian forest.

Obviously. What if it's a first-world country? How do you distinguish a country that is taxing as much as possible from one that is not?

I've heard Hong Kong has a pretty low tax rate. It also isn't a democracy, so it probably proves your point.

> Taking as much as possible through taxes and wasting some of the income are not mutually exclusive things.

If this was driven by attempts at wealth redistribution, you'd think that they'd start taking money from the military when increasing taxes is no longer possible. If countries just generally tax as much as possible, then I see no reason to blame welfare. If it's a given that countries are going to tax as much as possible, the only question is whether welfare would be more cost-effective than whatever else they'd spend the money on.






How do you distinguish a country that is taxing as much as possible from one that is not?

Developed countries in the former category would be spending close to the limit characteristic of all old democracies - between 40 and 50% of GDP (Sweden at one point tried to exceed that with obviously negative results for its economy). There are some exceptions but they have special circumstances (for instance, for tax havens, like Switzerland, the tax rates that generate maximum revenue would be lower). Developed countries can in principle spend a few times less (semi-authoritarian countries like Singapore in fact do), but it is obviously impossible to spend a few times more.

The fact that all democratic countries eventually arrive to this limit is the result of a general rule Ė democratic governments never lower non-military spending in times of prosperity and are very reluctant to do so in times of crisis.

I realize this is not a rigorous mathematical proof, but I donít think such proofs are possible in economics.

If this was driven by attempts at wealth redistribution, you'd think that they'd start taking money from the military when increasing taxes is no longer possible.


You need bread and circuses, not just bread. Not to mention that cutting military expenses may have negative economic consequences.
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melian
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