Krugman wants more Government

Krugman has a post “Our low, low taxes”:

I thought it might be useful to have a cleaner comparison of the major advanced countries. So here are taxes by all levels of government as a % of GDP, removing the clutter by only looking at the G7, and using data from 2007 so that things aren’t confused by the effects of the Great Recession:

And the graph on government revenues as a percent of GDP follows. Sure, the US has a relative low tax ratio. So what? Decades ago Friedman taught us that the share or weight of government in the economy is measured by the level of its expenditures as a share of GDP. Taxes are just the means through which government supports its “weight”.

The figure below shows that what Krugman in effect is advocating is that the US government “perpetuates” its higher share of the economy by raising taxes. Not long ago, in 2000, US government expenditures were “only” 33.9% of GDP while revenues were 35.4%. In 2007 expenditures were up to 36.8 with revenue dropping to 34%.

Don´t say taxes are “low”; say you want a larger role for government. It´s more honest!


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