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BackThe idea to conduct this study was born at last year’s European Forum Alpbach around the issue of tax ratios and economic growth. Several economic researchers started their speech by stating that a rise of tax ratios by so-and-so many percentage points would result in a decrease of the growth rate by so-and-so many percentage points. They did as if this postulate was a law of nature, and obvi-ously, it also seemed perfectly evident to the journalists and politicians present: They saw no need to question it at all.
However, even a layperson in economics should have wondered how it then came that Scandinavian countries generally had high tax ratios and nonetheless showed relatively strong growth rates in the normal case. The idea that the state, like an enormous kraken, paralyses the free entrepreneur in its energy is persistent and it seems to be unthinkable to challenge the claim according to which tax increases result in economic slowdown. Those who maintain the opposite are considered unscientific and as ideologues.
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Otto Farny
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Vanessa Mühlböck
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