Ladas wrote:
RangerDave wrote:
So, do you think that if the Federal government lowered it's individual income and payroll tax rates, but changed nothing else, total federal revenues from all sources would increase?
Elmo alluded to this, and I posted an article about it recently entitled Hauser's Law, that shows since at least the 1940s, federal income has averaged around 18.5% of the GDP, or the last 30 years, it has average 18.3% of GDP. There are slight variations going lower, sometimes higher, usually as a very short term response to changes in the tax code.
If lowering taxes increases the GDP, and if the trend of the last 80+ years holds then yes, lowering taxes will increase revenue after a relatively short adjustment period.
I'll have to read up on Hauser's Law a bit, but my over-simplification alarm bells are going off. For instance, marginal income tax rates and corporate tax rates went down during that time period, but payroll tax rates went up considerably. So, if the government is taking less from column A, but more from column B, it's not that surprising that the total stayed relatively constant, and it doesn't tell us much about what
just lowering income tax rates will do.
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