If we compare the United States to France, the U.S. tax wedge is smaller than the French tax wedge.
If we compare the United States to France, we see that potential GDP per person in France is less than that in the United States because the French tax wedge is larger than the U.S. tax wedge. Thus, the U.S. tax wedge is smaller.
The tax wedge is the difference between the price consumers pay and the value producers receive from a transaction. As France imposes the heaviest tax burden on high earners, its tax wedge is larger than the U.S. tax wedge.
Hence, the U.S. tax wedge is smaller than the French tax wedge.
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