Tuesday, November 23, 2010

Thoughtless Taxation | Richard W. Rahn | Cato Institute: Commentary

Many Democrats, including many lame ducks, are still demanding that tax rates for entrepreneurs be increased under the absurd claim that not to do so will "cost" the government "almost $2 trillion over the 2011-20 period" in lost tax revenues.

To believe these bogus numbers that the Joint Tax Committee staff and the administration put out about the revenue loss, one needs to believe that upper-income people will not alter their behavior when faced with higher tax rates, that high marginal tax rates on capital (the seed corn of the economy) and double taxation of it do not damage economic growth and job creation, and that the government is smaller than its optimum size to maximize the general welfare.

The empirical evidence as well as good economic theory demonstrate that none of the above is true — but to those politicians, mainstream media sorts and left-wing economists who cannot understand the difference between variables and constants, facts don't matter.

Thoughtless Taxation | Richard W. Rahn | Cato Institute: Commentary

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