Hauser's Law

12-07-2010 • Hoover Institution

Soak the rich? You can’t. A vital observation, first noted by former Hoover board chairman W. Kurt Hauser, banished this bit of wishful thinking. W. Kurt Hauser is a San Francisco investment economist who published fresh and eye-opening data about the federal tax system fifteen years ago. His findings imply that there are draconian constraints on the ability of higher taxes to generate fresh revenues. I think his discovery deserves to be called Hauser’s law, because it is as central to the economics of taxation as Boyle’s law is to the physics of gases. Yet economists and policy makers are barely aware of it. Like science, economics advances as verifiable patterns are recognized and codified. But economics is in a far earlier stage of evolution than physics. Unfortunately, it is often poisoned by political wishful thinking, just as medieval science was poisoned by religious doctrine. Taxation is an important example. See also: http://en.wikipedia.org/wiki/Hauser%27s_Law