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Tax the Rich! The State Spends their Money Better

by on September 11, 2012

The Dutch state spends 50% of GDP

An interesting new project for the BBC Radio 4 programme “More or Less” would be Dutch government expenditure as a percentage of GDP. My dad got on Dutch Business radio (BNR) to advocate for a smaller state but was told by a professor that the Dutch state spend only 30% of GDP. This is obviously not correct. A right-wing magazine (the Elesevier) with interest in overegging government expenditure only quoted 35% 40% as the tax pressure on the average Dutch citizen but, if you look at government expenditure as a percentage of the country’s total income (GDP) it needs to be concluded that it is 50% (this is without taking expenditure on health insurance into account).

Souce: Centaal Plant Bureau voor de statistiek (CBS)

Of course it comes back down to the question what is optimal statistic for measuring the size of the state?  As most other sectors of the economy are measured as a percentage of GDP it is surely only fair that government expenditure is measured in the same terms. The consequence is that we have to conclude that the state is a deemed a good enough allocator of the countries resources to be in charge of half of them. Is that really what the Dutch people think? Are their bureaucrats really that good and the general populous that stupid? The current elections should be one about the future of this expenditure. Should be government really spend this much and if it does who’s income should the government spend? If taxing the rich is the way then government is really concluding that it is a better allocator of resources than those who allocated their resources so effectively to create their wealth.

Please see an article on a the same topic in Dutch “De Staat Gebruik Geld Beter dan het Individu?

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