Tax Hikes and the Economic Collapse of 2011
Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market. - By ARTHUR LAFFER
People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.
It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.
People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."
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Goldman Sold 44% Of Its BP Stock 3 Wks Before Blowout
White House keeps 'boot' on BP's throat
The White House on Monday kept its "boot" on the throat of BP, despite the British energy giant's assurance that it is "absolutely" responsible for paying to cleanup the Gulf of Mexico oil spill. The Obama administration positioned itself as the "oversight" authority for the unfolding environmental disaster, stressing once again that BP, as operator of the sunken Deepwater Horizon rig, had a legal obligation to foot the bill. Influential senators also ratcheted up pressure on British Petroleum, introducing a bill that would raise the liability of oil firms after a disaster to 10 billion dollars.

