Every clip I've ever seen of Marco Rubio enhances his reputation as the rising star of the conservative movement. His grilling of Tim Geithner at yesterday's Small Business and Entrepreneurship Committee Hearing is no exception.
If Sen. Rubio hadn't been limited to a meager three minute Q&A with the Treasury Secretary, I'd have liked to see him bring up the additional point that, as per "Hauser's Law," higher tax rates don't lead to higher revenues. Writing last year in the WSJ, Kurt Hauser explained that
[n]one of the personal income tax or capital gains tax increases enacted in the post-World War II period has raised the projected tax revenues.
Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90)...
Over this period there have been more than 30 major changes in the tax code including personal income tax rates, corporate tax rates, capital gains taxes, dividend taxes, investment tax credits, depreciation schedules, Social Security taxes, and the number of tax brackets among others. Yet during this period, federal government tax collections as a share of GDP have moved within a narrow band of just under 19% of GDP.
Why is this the case? Higher taxes cause taxpayers to "shift, hide, and underreport income." Additionally, they depress entrepreneurial activity -- which leads us back to the crux of Sen. Rubio's argument: higher taxes kill jobs.