Example: The tax system has a pronounced impact on economic performance. For instance, the federal tax burden in the U.S. is about 17 percent of GDP, which is less than the aggregate tax burden in Hong Kong. Yet, since Hong Kong has a low-rate flat tax that generally does not penalize saving and investment, it raises revenue in a much less destructive manner. Similarly, the current U.S. tax system raises about the same level of revenue as it did 25 years ago, but the associated economic costs are lower because marginal tax rates have been reduced on work, saving, investment, and entrepreneurship.