Charles Hugh Smith asks a good question with his piece today:
"Efforts to collect more taxes fail because people adjust their behavior accordingly.
"Amidst all the "fiscal cliff" talk of raising tax rates, few dare to ask: have tax revenues topped out?
"How could tax revenues decline as rates go up? Easy: people modify their behavior in response to whatever incentives and disincentives are present.
"Make mortgage interest deductible and people will rack up huge mortgages. Reduce the yield on savings to near-zero (thank you, Federal Reserve) and people will save less.
"Raise tax rates and people will lower their income or move to low-tax locales. As the saying has it, "Money goes where it is treated well."
Supporters of higher rates tout studies that ..."