Taxes, Revenues, Globlization and Prosperity
Over the past decade, most OECD countries cut corporate taxes, some by a great chunk, and saw average state revenues go up -- not just in absolute terms. As the chart above shows, corporate-tax proceeds have also risen as a percentage of GDP.
By scrapping tax exemptions and lowering headline rates, governments have attracted investment, boosted growth and corporate profits, and improved tax compliance. It's a nice demonstration of the Laffer curve at work.
The study also disproves the mercantilist claim that world trade is a zero-sum game. Living standards rise when trade barriers fall. The OECD found that a 10 percentage-point increase in trade exposure -- the rise in exports and imports as a share of GDP -- has led to a 4% rise in income per capita.