Strangely, I made exactly this point to Jan a couple of years ago, as I tried to work out how people on wages of £12k seemed to live the same lifestyle as, say, someone on £25k to £40k in London.
It quickly became clear (to me, but not to those living in Worcestershire, who simply took it for granted) that the non-monetary/non-declared economy made up a significant portion of GDP. And this isn't a farming community, this is a sizeable town.
This would indicate that even in the UK the actual level of GDP is considerably higher than the official calculation, and that the tax burden as estimated by official numbers is slightly askew.
Tax avoidance by the well-off and the middle-classes is probably counterbalanced by the non-monetary part of GDP among lower wage earners. If you try to tax the high earners properly, they leave the country. If you try to tax the low wage earners properly, they sink into real rather than relative poverty.
Re: The rural economy
It quickly became clear (to me, but not to those living in Worcestershire, who simply took it for granted) that the non-monetary/non-declared economy made up a significant portion of GDP. And this isn't a farming community, this is a sizeable town.
This would indicate that even in the UK the actual level of GDP is considerably higher than the official calculation, and that the tax burden as estimated by official numbers is slightly askew.
Tax avoidance by the well-off and the middle-classes is probably counterbalanced by the non-monetary part of GDP among lower wage earners. If you try to tax the high earners properly, they leave the country. If you try to tax the low wage earners properly, they sink into real rather than relative poverty.
PJ