Why the tax burden is always higher than you think

This article was originally published on CapX by Nima Sanandaji.

How high is the tax burden? The most common way of comparing different countries is to look at how much of the total economic value created in each country – that is, the GDP – goes to taxes. In the UK the tax rate is 33 per cent of GDP. This is considerably less than in Denmark (47 per cent), but however lower than in the US or South Korea (24 per cent). Measuring the tax rate as a share of GDP is often the basis of international comparisons, research and ultimately the policy debate regarding the scope of the public sector. However, the measure is misleading.

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