Tuesday, January 01, 2013

It's a paradox! Higher taxes yield less revenue

Regarding Portugal's current economic crisis, the Financial Times reports:
Income from value added tax, the government’s biggest source of tax revenue representing about 36 per cent of the total, has been falling since 2008, despite a sharp increase in the rate
Income from the tax "has been falling ... despite[!] a sharp increase in the rate"?  Those familiar with the Laffer Curve know that, at high rates of taxation, that should be "because" not "despite."

Daniel J. Mitchell (Ph.D in Economics from Geo. Mason University) has helpfully collected examples of Laffer Curve effects from Europe, including Portugal, Greece, Spain, Bulgaria, France, Italy, the United Kingdom.

In the US, Pres. Obama is trying the same thing over again and expecting a different result.

Hat tip: Instapundit.

PREVIOUSLY on the paradoxes that vex liberal minds:
Paradox: Despite its spending more money per capita on homelessness than any comparable city, San Francisco's homeless problem is worse than any comparable city's
Paradox: gun sales up despite politicians' threats to ban gun sales
Paradox: student test scores improve despite school funding decrease
News report: Gun crime down "despite" increase in gun sales
It's a paradox: Congress unpopular "despite record"
"Ironically," conservatives and their children are happier
It's a paradox!: Crime down when criminals are in jail.
Paradox: crime is down (again)
Paradox: few fraudulent voters if voters are required to have IDs

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