Reply #83: Hmmm redux

[cyberia]

The Swedish economy, which is quite vigorous and has about the highest rate of taxation in the world, seems to be a counterexample to your explanation.

If I'm not mistaken, Social Security is also a counter example. Providing pensions is not so much a humanitarian exercise as it is an economic stimulus. By putting funds in the hands of retired folks who would otherwise live in poverty, they are transformed into consumers.

Quite frankly, I have trouble understanding why taxation should cause economic problems unless the taxes are withdrawn from the economy. If they are recycled into spending, which is the case, AFAIK, they should be economically neutral, if not beneficial.