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I think it could be reasonably argued that taxation, if not mismanaged, can actually increase net innovation by allowing more people the freedom, security, and education needed in order to be able to spend time innovating instead of surviving.

The whole reason the priesthood (and to an extent nobles too) was the core of education way back in medieval times was because they didn't have to worry about surviving. On the other hand, peasants could barely innovate at all because they spent most if not all of their time in labor.

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