Tax Burden and Economic Performance

So I changed my sample set to reflect only those countries in the OECD for which the relevant information was available. Then I messed around with nonlinear regression equations and came up with some higher correlation coefficients. Here are the results:

OECD 30 Tax Burden as a Share of GDP


Tax Burden and GDP per capita.


R = +0.384 (medium strength)

Tax Burden and Average Annual Growth in GDP per Hour Worked (one measure of productivity), 1980-2006.


R = +0.388 (medium strength)

Tax burden is given as a percentage of GDP. Data available here.

GDP per capita is provided in 2007 USD (PPP). Data available here.

Annual growth in GDP per hour worked data here.

So a higher tax burden has a moderately strong positive correlation with both overall income per capita and the rate of productivity growth since the beginning of the Reagan/Thatcher era.