Dan Mitchell has a wonderful post uniting two of my passions–economics and Snooki:
I don’t know if that’s true, but let’s give it a try. I now have an example of the Laffer Curve for the MTV audience. Best of all, the story is from USA Today.
The IRS got red-faced trying to collect the new tanning tax, burning a hole in estimates on how much the levy would bring in to federal coffers, a new report said Thursday. …Tanning tax receipts for that nine-month period totaled $54.4 million, the report found. That was below projections by the Congressional Joint Committee on Taxation, which had estimated the tax would raise $50 million in the last three months of fiscal year 2010 and $200 million for the full 2011 fiscal year.Supply-Side Snooki?
Let’s deconstruct the numbers from the article. The Joint Committee on Taxation estimated that this new “Snooki” tax (part of the awful Obamacare legislation) was going to raise about $50 million every three months.
Yet during the first nine months, the tax raised just $54.4 million, not $150 million.
To be fair, some of this huge revenue shortfall may be a result of short-run factors associated with levying a new tax, but does anyone think the actual revenues will match the JCT’s estimates at any point in the future? If you think that will happen, get in touch with me so we can make a friendly wager.
Why am I willing to put my money where my mouth is? Simple, the government’s revenue estimators have been consistently wrong for decades because they use models that assume tax policy has no impact on economic performance.