Tuesday, May 24, 2011

All the king's horses and all the king's men will merely put 19% back together again.

Politicos currently discussing taxation levels vs. spending levels, the discussion has to be viewed through the prism of reality not the theoretical.

Yes a flat tax and removal of tax preferences, etc. is a most excellent idea. However, building a tax code over decades and decades based on special interests is extremely hard to reverse. The politico can't afford a major mistake or to alienate special interest political constituency. Hence the tinkering with the tax code will likely be marginal at best.


Even if the tax code was revised at the margin the special interests are not going away and they will be back knocking on the door.

Hauser's law states regardless of the mix of tax and tax preferences, tax will yield revenue just under 19% of GDP. (1) If one considered Hauser's Law as true, then just under 19% of GDP is the magic number.

All the king's horses and all the king's men will merely put 19% back together again.


Notes:

(1) http://thelastembassy.blogspot.com/2011/02/obamas-proposed-budget-bad-meets.html

1 comment:

  1. Thanks W.E. I never heard of Hauser's law. That's interesting.

    ReplyDelete