Taxes, Independence, and Canada
By Bryan Caplan
In response to yesterday’s doubts about the benefits of American independence, many commenters emphasized the importance of taxes – and pointed me to the Declaration of Independence.
But this doesn’t really answer my question: Did the Revolution actually lead to lower taxes? I’ve heard several historians make the sensible point that American taxes were low because the British subsidized colonial defense. Are they wrong?
Peter Jackson adds:
You’re question is tantamount to asking whether we’d better off if the world had two Canadas instead of one Canada and the US.
Not quite – the process that made Canada slightly more statist than the U.S. would have worked differently if both the U.S. and Canada remained British colonies. E.g. More Irish would probably have gone to Canada instead of the U.S. if both places were part of the Empire.
In any case, the modern economic policy difference between the U.S. and Canada is pretty small – 8.2 versus 8.0 on the Economic Freedom of the World scale. Indeed, if you think that U.S. branch banking regulations played a big role in the Great Depression, there’s an argument that Canada’s economic policy has, on average, been better than ours.
Whatever you think about the economic policy edge of the U.S. over Canada, though, isn’t it dwarfed by the fact that the British Empire peacefully abolished slavery decades before the U.S. Civil War?