@joefromchicago,
joefromchicago wrote:
[You mean like the persistent-yet-thoroughly-refuted belief that cutting taxes raises revenues? That's not a logical error, that's a psychological bias.
I have never made such an absurd general proposition. Nor have I ever made such an equally absurd blanket denial such as the one you gave here.
The relationship between Tax Rates and the resulting tax revenues is clearly a function of numerous external variables, as well as the starting values of tax rates and collections themselves. It's a fairly easy proposition to show that at extremely low tax rates, an increase in the tax rate will usually yield aan increase in revenues. That's because, at some low point, tax rates have only a small effect on total exonomic activity. Likewise it is easy to show that at very high tax rates, a decrease in the tax rate will often yield enough increased economic activity to more than offset the nominal revenue loss associated with the rate reduction, resulting in a revenue increase. It is noteworthy that, at high initial tax rates, a large portion of increased economic activity goes to tax revenues.
Even a detailed and therefore complex analysis of this problem would fall short of the certainty you so blithely expressed, in that the energy and creativity people put into hiding income and otherwise evade taxes, through political action or simply diverting economic activity to barter or undocumented transactions, observably increases very quickly with rising tax rates.
It takes a simple mind to favor simple explanations.