Daniel J. Mitchell
Leftists want higher tax rates and they want greater tax compliance. But they have a hard time understanding that those goals are inconsistent.
Simply stated, people respond to incentives. When tax rates are punitive, folks earn and report less taxable income, and vice-versa.
Leftists want higher tax rates and they want greater tax compliance. But they have a hard time understanding that those goals are inconsistent.
Simply stated, people respond to incentives. When tax rates are punitive, folks earn and report less taxable income, and vice-versa.
- When tax rates increase, sometimes they engage in tax avoidance, lowering their tax liabilities legally.
- When tax rates change, sometimes they choose to alter their levels of work, saving, and investment.
- And when tax rates go up, sometimes they resort to illegal steps to protect themselves from the tax authority.
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