David Broder did not know the difference between tax increases and tax-revenue increases.

This is a message I sent to David Broder of the Washington Post on 5/2/10, on the subject of his failure to acknowledge the difference between tax increases and tax-rate increases.  Given that Mr. Broder survived the receipt of this message by less than a year, I confess to having experienced some guilt upon learning of his passing.

It will continue to be impossible to have a serious discussion about budget deficits, for so long as one side persists in beginning the discussion with a false premise: the fiction that increasing the rates (or scope) of taxation will have the effect of increasing the revenues that result from taxation.   As has been demonstrated at great lengths by economists David Ranson (“Hauser’s Law”), Alan Reynolds, and innumerable others, the static analysis the underlies the presumed correlation between rates and revenues is flawed.  Individuals and enterprises change their behavior based upon changes in the tax laws, and tax-revenues ultimately can be grown only by growth in the GDP; fiscal policy can only grow GDP by decreasing tax rates, not by increasing them –  issues of fairness, equity, and the like are not pertinent to the discussion.   Once you get serious about fiscal policy, you shall find that Republicans are quite willing to discuss all aspects of the expenditures side of the equation, including third-rail issues like Social Security and Medicare.

[Posted on mecmoss.com 10 Feb 2012]

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