It shouldn’t surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the non-taxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it’s also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.
It’s a good piece, but take everything Laffer says with a grain of salt. He was cheer-leading the housing bubble (contra Peter Schiff) in 06 through 08.
Please subscribe to our RSS feed and join our Facebook group.
Wed, Jun 16, 2010
Taxation