Hauser's Law - You Can't Soak the Rich in America

[Howell]

http://online.wsj.com/article/SB121124460502305693.html

"The chart nearby, updating the evidence to 2007, confirms Hauser's Law. The federal tax "yield" (revenues divided by GDP) has remained close to 19.5%, even as the top tax bracket was brought down from 91% to the present 35%. This is what scientists call an "independence theorem," and it cuts the Gordian Knot of tax policy debate.

The data show that the tax yield has been independent of marginal tax rates over this period, but tax revenue is directly proportional to GDP. So if we want to increase tax revenue, we need to increase GDP.

What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser's Law says it will also lower tax revenue. That's a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice. It would surely be unpopular today with those presidential candidates who plan to raise tax rates on the rich – if they knew about it."

 

[jtr1962]

We're never going to raise GDP if we continue with this idiotic service-based economy and consumerism. We need to get real manufacturing back in this country and also have an economy based on capitalism again, not consumerism. There is a difference between the two. Capitalism is getting a person to buy something because it lasts longer or is better than something else they're using, or performs a new function they really need. Consumerism is getting people to buy useless crap they don't need, but rather want, or to change things simply for the sake of change, even when the old thing is still functional (i.e. planned obsolescence). As such it's more subject to fluctuations in disposible income and changes in tastes, and leads more easily to economic cycles. Jobs based on consumerism are typically less stable, service-oriented jobs which not only pay less, but tend to be less creative, more repetitive. Manufacturing-based jobs generally pay much better, tend to be more stable, and can be much more interesting (although assembly-line work is admittedly boring as all hell). As an aside, a consumerism-based economy also tends to have lots more annoying advertising since you have to push more to get people to want to buy stuff they don't really need. Oh, and it leads to a population less capable of distinguishing wants from needs. Plus many people end up with houses full of useless, worthless clutter.

 

[Tannin]

I often have doubts about JTR's political rants, but I have to agree entirely with that one.

Howell, the time for debating marginal income tax rates is past. Dead and buried.

Required in this modern age is a taxation system that rewards responsibility and taxes irresponsibility. In other words, forget taxing income altogether. Tax energy use. Want to pay less tax? Use less fossil fuel. Want to opt out of paying tax completely? You are welcome to - and you don't need a fancy lawyer to help. Cut your carbon emissions to zero and pay no tax.

 

[LiamC]

+1 to JTR

 

[Tannin]

Err.... you wanna try that post again without the signature, Liam?

(Thinks: what's my sig at the moment? Can't remember. Oh well, take a chance.

 

[ddrueding]

+1 to JTR, Tannin, and LiamC's sig...

 

[LiamC]

Context is everything

:eekers:

 

[LunarMist]

Plus many people end up with houses full of useless, worthless clutter.

I resemble that remark.

 

[ddrueding]

I resemble that remark.

I'll be moving in the next week or so, and I am very glad I haven't been accumulating crap.

 

[LunarMist]

I have a bunch of hard drives and photo gear. Some call that junk.

 

[ddrueding]

I have a bunch of hard drives and photo gear. Some call that junk.

If it's expensive enough, it moves from "junk" to "equipment". I have lots of that

 

[Howell]

Howell, the time for debating marginal income tax rates is past. Dead and buried.

You'll get no argument from me. I've been shouting from the rooftops. Not only is it bad philosophically and theoretically it does it not achieve the desired effect effectively. Unfortunately the american political left doesn't see it the same way.

 

[MaxBurn]

+? to jtr's rant but I don't have the skills to form an opinion on the tax situation, it is an interesting theory though.