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Politics : PRESIDENT GEORGE W. BUSH
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To: DuckTapeSunroof who wrote (685576)6/15/2005 1:00:47 AM
From: Peter Dierks  Read Replies (1) of 769670
 
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One thing you have to remember is that we are dealing with people. People are not biologically driven to optimize their performance in a given system. They strategize to find exceptions to a system. They optimize in ways that no one is likely to predict.

IMO there is no optimal peak for the Laffer Curve. It will change because people will adapt systems for dealing with the tax code regardless of complexity or simplicity. IMO the only way to optimize the curve is to change tax codes and rates occasionally. Every few years tweak the system a little and people will take advantage of the tweaks. For example the capital gains tax reduction had been allowed to lapse prior to President Reagan's term. The reinstitution of it allowed untold millions of dollars in gains to be taken that had been frozen in inefficient investments because the tax penalty made rebalancing or moving investments too expensive. This caused taxes that had been postponed for years to be collected.
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