Brad DeLong finds a new problem with everyone's favorite macroeconomic chart -- not only has the line been incorrectly drawn through Norway rather than to fit the data points, they haven't even plotted Norway correctly:
The revenues plotted on the vertical scale include oil excise taxes levied on corporations. The tax rates plotted on the horizontal scale do not--hence the Norway "tax rate" of 28% rather than the correct 52%.In short, in non-Norway countries, tax revenues rise with tax rates across the range of rates actual countries apply (I think one should concede that, in principle, a tax rate could be so confiscatory as to decrease revenues; the question is whether we are actually anyway in that neighborhood) and this exact same pattern holds in Norway as well.
This article available online at:
http://www.theatlantic.com/politics/archive/2007/07/monday-norway-blogging/43196/
