Sunday, June 26, 2011

an inconvenient truth (about taxes)

Soak the rich? You can’t.

Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation.

Although Hauser’s law sounds like a restatement of the Laffer curve (and Hauser did cite Arthur Laffer in his original article), it has independent validity. Because Laffer’s curve is a theoretical insight, theoreticians find it easy to quibble with. Test cases, in which the economy responds to a tax change, lend themselves to many alternative explanations. Conventional economists, despite immense publicity, have yet to swallow the Laffer curve. When it is mentioned at all by critics, it is often as an object of scorn.

Hauser’s Law via Hoover Institution
by W. Kurt Hauser and David Ranson

Mr. Hauser is chairman emeritus of the Hoover Institution at Stanford University and chairman of Wentworth, Hauser & Violich, a San Francisco investment management firm.

David Ranson is head of research at H.C. Wainwright & Co. Economics Inc.

This essay appeared in the Wall Street Journal on May 20, 2008.

See also There's No Escaping Hauser's Law in the Wall Street Journal by W. Kurt Hauser on November 26, 2010.

also see the following:
Millionaires Go Missing - Wall Street Journal
One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

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