Some 40 years ago the Wall Street Journal popularized a concept called the Hauser Curve.  It’s the cousin of the Laffer Curve and it shows that raising the highest income tax rate rarely raises much revenue.

A reader recently updated  the Hauser Curve and, guess what: it holds true. Revenues as a share of GDP have been fairly steady, in the range of 16% to 20% of GDP for 100 years, whether the top tax rate was 90% or 28%.

Why is raising tax rates on “the rich” a futile exercise for balancing the budget or redistributing incomes?

Higher tax rates encourage tax avoidance and evasion. They slow down the economy, which lowers tax collections. Higher tax rates also spur lobbyists and lawmakers to create more tax loopholes. Finally, rich people move out to avoid confiscatory taxes – just ask California and New York.

The best way to turbo-charge the economy and enhance tax collections is with a Steve Forbes flat tax.