Friday, April 3, 2009

Hauser's Law

Just one more post about taxes. Last May, an economist named David Ranson wrote an op-ed piece for the WSJ describing what he called Hauser's Law. Hauser is Kurt Hauser, another economist who discovered the amazing relationship between marginal income tax rates and revenues as a percentage of GDP. There is none. As Hauser stated, "No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP." This implies that higher revenues can be generated by lowering tax rates, since doing so stimulates economic growth and raises GDP. The graphic representation of Hauser's Law is shown above. The entire article is here.

Parents are taught never to criticize the child, only the child's (bad) behavior. I try to follow that rule for this blog. For example, I would never say that President Obama is an imbecile. Instead, I say, respectfully that his proposed tax policies are imbecilic. He wants to raise taxes on the "rich" to pay for his grandiose entitlement expansion. Good luck with that.

No comments:

Post a Comment