Now I like Factcheck.org as much as the next guy, but sometimes they just get things wrong, like their wrong-headed analysis of John McCain’s statement that President Bush's tax cuts have increased federal revenues. They claim, “But revenues would have been even higher without them.”
Sadly, this analysis is all WRONG!
It’s surmises that people (especially higher income people) would NOT defer their incomes, as they do when income tax rates rise.
That presumption can NEVER be made.
In fact, the reverse CAN BE surmised, because “PEOPLE ALWAYS RESPOND TO INCENTIVES” and lower/higher tax rates are incentives.
In short, though tax revenues would’ve been higher HAD higher income people paid their taxes upfront, without deferring income, THAT would not have happened had tax rates stayed high, as higher tax rates are an incentive to deferring income.
Sadly, this analysis is all WRONG!
It’s surmises that people (especially higher income people) would NOT defer their incomes, as they do when income tax rates rise.
That presumption can NEVER be made.
In fact, the reverse CAN BE surmised, because “PEOPLE ALWAYS RESPOND TO INCENTIVES” and lower/higher tax rates are incentives.
In short, though tax revenues would’ve been higher HAD higher income people paid their taxes upfront, without deferring income, THAT would not have happened had tax rates stayed high, as higher tax rates are an incentive to deferring income.
