Tax Hikes and the 2011 Economic Collapse
People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.
It shouldn’t surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
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Today’s corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market…Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market…The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain’t seen nothing yet.
(Excerpt) Read more at online.wsj.com
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