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This paper explores the distortions on the cost of education, associated to government policies, as an additional determinant of cross-country income differences. Human capital follows a Mincerian approach and accumulation of skills is done at school) outside the labor market. There are two sectors, one producing goods and the other providing educational services. The model is calibrated and simulated for 122 economics. We find that human capital taxation has a relevant impact on incomes, which is amplified by its indirect effect on returns to physical capital. For comparable values, distortions to the latter have an overall effect on incomes smaller than human capital taxation. Life expectancy plays an important role in determining long-run output: the expansion of the population working life increases the present value of the flow of wages, which induces further human capital investment and raises incomes. A general conclusion, however, is that there is not a single cause for the poverty of nations. Some are poor because of very low productivity, and others because of excess taxation on factors. Download Paper