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The ALEC rankings: does smaller government mean higher growth?

POSTED ON August 17th  - POSTED IN Blog, Tax

There are a lot of ‘competitiveness’-related rankings of countries and states out there, from the World Economic Forum’s Global Competitiveness Report, to the World Bank’s Ease of Doing Business rankings. (We’ll address some of these in due course.) It’s interesting to note, for starters, that the highly taxed, highly regulated Scandinavian economies seem to do just as well as their low-tax, lightly regulated peers. Recently we made up a little graph to illustrate this, looking at the WEF’s ranking:

Source: WEF, Conference board. The sample of countries included those with comparable levels of GDP per capita, and excluding micro-states which often have their own ‘tax haven’ growth dynamics. The cut-off was to use states with GDP per capita (PPP) of above $20,000 on average from 1989-2013. Source: Conference Board data tables.

Source: World Economic Forum, Conference Board. The sample of countries included those with comparable levels of GDP per capita, and excluding micro-states which often have their own ‘tax haven’ growth dynamics. We used states with GDP per capita (PPP) of above $20,000 on average from 1989-2013. Source: Conference Board data tables.

There’s no obvious trend here, is there? The high-tax countries seem to be just as ‘competitive’ as the low-tax ones, it seems, even on the WEF’s measures, (which are somewhat skewed toward the low-tax, light regulation model.) The non-trend you see in this graph is just as Martin Wolf, Paul Krugman and various others would have predicted.

U.S.: new transparency on corporate tax breaks

POSTED ON August 17th  - POSTED IN Blog, Tax

Across the world corporations are showered with tax breaks and other inducements in the name of ‘competitiveness.’ In most cases these tax breaks don’t affect investment decisions in any way. They are pure giveaways. In many countries it’s been hard to track the scale and extent of these giveaways, although recently we reported on one such effort by Kevin Farnsworth in the UK, which noted that the race to the bottom between nations and states on tax and corporate subsidies doesn’t stop at zero: it just keeps heading on downwards.

In the United States there has been some very good work done by nonprofit groups, notably Good Jobs First, to expose what’s been going on. (Greg Leroy, Director of Good Jobs First, attended the Fools’ Gold inaugural meeting in Warwick, UK, in February this year.

Now they report in a press release on an excellent development – a form of transparency that’s recommended for all countries.

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