TAXES DON'T GO UP:

Squeezing the Rich Is Poor Way to Spur Growth (Caroline Baum, Aug 4, 2010, Bloomberg)

What we do know, empirically, is this: Over time, federal revenue as a share of gross domestic product has stayed fairly constant at 17.9 percent. That’s true if the top marginal tax rate is 91 percent (1950s), 50 percent (early 1980s) or 35 percent (2000s). Recessions are the one exception.

So, if the government’s tax take varies little, why create uncertainty over how much of our income we’ll have to fork over to Uncle Sam three, five, 10 years down the road? Why not flatten the rate, fix it and forget about it?

Fairness, for one. The government wants to take money from the rich and give it to the poor.

“They are wrong,” Laffer says. “It doesn’t work that way. The rich can change the volume, timing, composition and location of their income. Poor people can’t.”

Congress is the second. The tax code is the means through which lawmakers dole out tax breaks, credits and exemptions in return for campaign contributions. Which is why tax simplification in 1986 was such a short-lived phenomenon, says Jim Glassman, senior economist at JPMorgan Chase & Co.

The constancy is why the Right's fretting about consumption taxes is hysterical.

Posted by Orrin Judd at August 5, 2010 5:21 PM