So do disincentives. The truism is well illustrated in Art Laffer’s WSJ article, Tax Hikes and the 2011 Economic Collapse. In it he uses history to illustrate the adverse effect of our upcoming tax changes.
“Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.”
“The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain’t seen nothing yet.”
The article is too important not to read and understand in its entirety.
Posted from Golfito, Costa Rica.