In WSJ Opinionjournal Online David Ranson writes “You Can’t Soak the Rich”, and offers an insight to the controversial Laffer Curve.
Kurt Hauser, an investment economist, notes that the tax revenues remain flat at 19.5% of GDP regardless of the tax rates, even as the top tax rates were lowered from 91% to 35%.
Therefore the tax revenue dollars can be maximized far more by growing the GDP than by shifting the rates or soaking the rich.
The rich are tax averse and with a global investment universe will invest where it is most receptive. Particular attention should be given to marginal tax rates; the tax rate on the next dollar of income. As painful as it is to the redistributionists, a cut in the tax rate of the wealthiest is far more productive in generating more GDP and more tax revenues than a middle or lower class tax cut.
When you rob Peter to pay Paul you can count on Paul’s approval; but you can also count on Peter leaving town.