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Thursday, April 30, 2015

Broken Window, Taxes and U.S. Economy

I've known about the relationship between federal tax receipt percentages measured against the GDP in the United States, so it was instructive for me to read on McClellan Financial Publications, an article talking about the fact taxes in the U.S. are "returning to Economy-Killing" levels.

Here's the main thesis of the article:

"Whenever total federal tax receipts have exceeded 18% of GDP, the result has always been a recession for the U.S. economy."

It goes on to state that "sometimes we can see that effect from a total federal take at less than 18%." The latter (below 18%) aren't as consistent as when the federal tax receipts are over 18%, but it's still a definite possibility that a recession is just around the corner.

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