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UAE ECONOMIC REPORT

A. It is the developed countries that, for whatever reason, take more taxes per dollar of income from their citizens. Now, I would not interpret that evidence to necessarily mean that high taxes (and high government spending) cause prosperity, but it is a troubling fact that the people who say low taxes are the key to prosperity must confront. In fact, the positive correlation is prob- ably largely due to factors, such as education level, that vary across countries and are connected with prosperity as well as facilitate the collection of taxes. So that positive correlation be- tween prosperity and the tax ratio is not necessarily causal in either direction