Erskine Bowles and Alan Simpson, chairs of the deficit commission, cap government revenue at 21% of G.D.P. Paul Ryan's Republican Budget restricts government revenue to 19% of GDP. Are such caps necessary for a prosperous economy? Prosperity for all citizens requires both a strong public sector and a strong private sector. Actually as a percent of G.D.P., the United States has one of the lowest tax rates in the world including all levels of taxes - local, state, and federal. The United States rate is 27.3% whereas Germany has 36.2% and Denmark has 50%. Yet Germany is second highest in exports, and Denmark has a growing export industry and an unemployment rate much lower than the U.S. Both countries have strong social safety nets.
Tax rates to provide services to citizens, in other words, do not necessarily harm the private sector. They can enhance the private sector, for example, by lowering the cost of health care, by providing the educational investment necessary for highly skilled workers, through research later used in products sold by private corporations, and by building the private infrastructure used to transport goods. According to Our Fiscal Security, the tax rate on the top income bracket was as high as 80% during the 1960s, when the average growth rate of the economy was almost 4.5%, compared to a growth rate of around 1.7% for the past decade of historically low taxes on the wealthiest. See how U.S. taxes compare internationally.