[Nokinside]

I run business in Finland and pay high taxes. Friction is not the taxes. If it were, I would have moved my business to Estonia long time ago, it's just few hours away. I could do it over internet in few hours and start within days.

There are different ways for countries compete as "business platforms". I'm not saying that some way is better than another, what I'm saying is that there are different strategies that can work.

High taxes in Nordic countries work as form of evolutionary pressure. They harm low-tech low education requirement jobs and businesses. They drive them to China and to the third world. They help high-tech companies and skilled workers, because taxes pay for great education, safety nets general well-being.

Within US different states have different strategies. High-tech hubs seem to tax more and provide more just like Nordic countries. Some states choose to compete with low regulation low pay jobs against Mexico, China and India. Good luck with that. https://en.wikipedia.org/wiki/State_tax_levels_in_the_United...

[Houshalter]

I think you've vastly confused cause and effect. Rich economies can afford high tax rates because they are rich, and poor economies have to compete for what businesses they can get.

Another obvious confounder is that richer states tend to be more urban, and urban places tend to be more liberal. Which vote for higher tax rates and social programs. Rural states are more conservative which favor smaller governments. This is just an effect of political demographics, not a cause of superior tax policies.

[Nokinside]

Many rich economies started poor.

Systematic investment to education and infrastructure have provided the tools to become a rich economy. Becoming rich country with low level taxation is possible only for countries with lots of natural resources, like oil.

[Houshalter]

Governments in most rich countries today are vastly larger than a century ago. American in particular was basically an extreme libertarian system until relatively recent times. These countries were already rich, or well on their way to becoming so, when their governments bloated up. Rich societies cause big governments, not the other way around.

Additionally, things like education and infrastructure are a tiny fraction of government spending (although they tend to keep growing despite not getting any better.) Almost no one disagrees that the government should fund those things. That's not where the vast majority of your high taxes are going.

[kemerover]

Systematic investment to education provides new enrollees for MIT and Stanford and, subsequently, workforce for Apple and Google. Brain drain is a real problem for developing countries.

[seanmcdirmid]

Chinese tax rates are not low. Only the base is lower, but taxes in china actually wind up being quite high.