Hauser's Law

What is Hauser's Law? Hauser's law states that total tax revenues per year are always equal to 19% of GDP. Now what happens if the Government raises taxes? Well, of course the GDP will shrink because higher taxes have a negative effect on business activity. So what happens when the Government raises taxes is that business activity drops so the GDP drops and then total tax revenue also drops because is will not be above 19% of GDP, even though the Government has raised taxes in an attempt to collect more revenue. By the way, Hauser's Law is based on many years of GDP and tax revenue data and is not challenged by anyone that knows economics.

So what should the Government do to get more revenue? The answer is to actually reduce taxes which will stimulate business, increases GDP, and so total tax revenue actually increases. This has been proven in the past when taxes have been reduced. Obviously there is then some optimum tax rate which will allow a healthy business tax environment with a growth in GDP, but still have enough tax revenue to meet necessary government expenses.

Economists, if they are worth their pay, should be able to calculate what that tax rate should be based on the vast amount of data that is available to them. Then Congress can set rates that will allow reasonable revenues without killing business.