Happy Tax Day

Via Chris Blattman, I found the chapter “Taxation & Development” by Besley & Persson. It is self recommending, but I wanted to talk about an amazing graph it presents:

Image

Sure, it’s a great example of heteroscedasticity driven by the independent variable, but it’s also a reverse Tolstoy. The poor countries are (almost) all alike, but the rich countries are (almost) all outliers!

10 rich countries have a tax share of above 40%, while 8 are at or below 20%. The range for the rich countries appears to be from 4% to 52%, so I guess there is more than one tax path to prosperity (the tax data used come from here).

One thought on “Happy Tax Day

  1. Hi there – wow, that’s really interesting. I tried to find the same data from the world bank and got tax as a % of GDP – is that the same as share of taxes in GDP? At a glance, the data didn’t look the same (e.g. nobody in 1999 had more than tax revenue higher than .4). Is there a reason they’re different or am I not comparing like with like?

    WB data here:
    http://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS?page=6

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