Wednesday, December 22, 2010

Basic Economics

That people respond to incentives (and to disincentives) is one of the basic principles of economics. The following comes as a surprise only to people who are such ideologues that they refuse to believe in economics.

From International Liberty:

Politicians approved a big tax hike on those bad, evil rich people in 2009, and Oregon’s spite-filled voters approved that measure earlier this year.

So how’s is Oregon’s class-warfare approach working? Not surprisingly, the politics of hate and envy is generating poor results. Revenues are much lower than forecast, as anyone with a rudimentary understanding of the Laffer Curve could have explained. The most noteworthy result is that about one-fourth of rich taxpayers have disappeared.

Again, the only people who are surprised by this are the ones who believe that the purpose of taxes is to be "fair", not ones who believe that the purpose of taxes is to fund the legitimate activities of government.

And in a related story from the Washington Examiner, regarding state income taxes:

Altogether, 35 percent of the nation's total population growth (since the last census) occurred in these nine non-taxing states, which accounted for just 19 percent of total population at the beginning of the decade.

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