Hauser's Law of Tax Increase Futility

In a corollary to the Laffer Curve, the Californian economist Kurt Hauser pointed out that no matter what the tax rates had been in postwar America, tax revenues had remained at around 20% of GDP. This remained the situation whether the top individual rate was 90% as in the 1950s or 30% in the late 1980s.  The best way to raise tax revenues is to increase GDP, not simply to increase top tax rates since such an action simply reduces the GDP. If any of the New Labour grandees had ever held a job or had any experience of the workplace, they would realise that higher taxes reduce the incentives to work, produce, invest, and save, thereby dampening overall economic activity, and job creation. A large number rich are likely to choose to live off their capital until tax rates come down to a level they view as fair or move to another country where the tax rates are more welcoming. Capital migrates away from regimes in which it is treated harshly and toward regimes in which it is free to be invested profitably and safely. In this regard, the capital controlled by our richest citizens is especially tax intolerant.

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