Reinforcing Hauser’s Law

by Ashley Muchow Mercatus Center’s Veronique de Rugy has made it on our list of bloggable material for quite some. She has, yet again, delivered another applicable piece of statistical analysis. In the graph below, de Rugy uses the earliest records available to plot the historical path of tax revenue as a percentage of GDP and the trend of the top...

by Ashley Muchow

Mercatus Center’s Veronique de Rugy has made it on our list of bloggable material for quite some. She has, yet again, delivered another applicable piece of statistical analysis.

In the graph below, de Rugy uses the earliest records available to plot the historical path of tax revenue as a percentage of GDP and the trend of the top marginal tax rate on individuals.

The data de Rugy has charted shows since 1930, U.S. tax revenue has not topped 20.9%–averaging 16.5% of GDP over 80 years–despite the historical fluctuation of the tax rate placed on America’s wealthiest individuals.

De Rugy’s findings are consistent with Hauser’s Law–on which I recently blogged–stating that federal tax revenues since WWII have been approximately equal to 19.5% of GDP, regardless of wide fluctuations in the marginal tax rate.

Time we listen to the messages history is sending.