Politicians often measure the impact of tax-rate changes on the number of dollars they “generate” or “cost”. This is useful for generating large, impressive numbers, but it’s not actually a useful measure, for two reasons. First, tax changes never generate or cost the predicted amount. (In fact, Hauser’s Law indicates that tax-rate changes have essentially no impact on revenues.) Second, it’s the tax rates themselves — not the overall amount collected — that is relevant to taxpayers’ lives and (particularly the marginal rates) to the health of the economy.
Hank Adler, a professor at Chapman University, has looked at Barack Obama’s proposed tax increases, and notes that they are almost unprecedented in US history. (Via TaxProf, via Instapundit.) One frightening figure is an tax increase of as high as 39% on self-employment income.
In fact, since the First World War, there has only been one tax increase greater than the one Obama proposes: Herbert Hoover’s tax increase of 1932. Hoover’s economic policy (which Obama promises to follow in other ways as well) is now generally seen as regrettable.
Internet Scofflaw 