Do increased taxes increase or decrease economic growth? Table 13.1 gives tax revenues as a percentage of Gross Domestic Product (GDP) and the average annual percentage growth in GDP per capita for nine countries during the years 1970-1994. Do these data support or contradict the dictum of supply-side economics? 

Transcribed Image Text:

TABLE 13.1 Economic Data from Nine Countries Country kate su mumis Japan U.S. Italy Canada Switzerland Britain Germany France Sweden Tax revenues as % of GDP 26% 27% 33% 34% 30% 36% 38% 42% 49% Average annual growth in GDP per capita 3.1% 1.6% 2.5% 2.0% 1.0% 1.9% 2.2% 1.9% 1.1%