Back in mid-2010, I wrote that Portugal was going to exacerbate its fiscal problems by raising taxes.
Needless to say, I was right. Not that this required any special insight. After all, no nation has ever taxed its way to prosperity.
We’re now at the end of 2012 and Portugal is still saddled with a weak economy. And the higher taxes haven’t resulted in less red ink. Indeed, according to the Economist Intelligence Unit, government debt has jumped from 93 percent of GDP in 2010 to 124 percent of GDP this year.
- Higher taxes undermine incentives for productive behavior, thus reducing an economy’s potential for growth. This means less economic output, which also…
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