“The economy will collapse in 2011.”
On June 6, 2010 the Wall Street Journal published an op-ed by Aruthur Laffer, Tax Hikes and the 2011 Economic Collapse. The synopsis provides, “Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market.”
The premise of the article is that taxes are an incentive for behavior:
Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.
Laffer is definite regarding the effects that increases in taxes will have on the economy in 2011: “The economy will collapse in 2011.”
In Wealthy Shift Their Income to Avoid Higher Taxes (WSJ Blogs: The Wealth Report, 6/8/10), Robert Frank discusses Laffer’s article. Frank provides this summary of the article: “In his Wall Street Journal op-ed Monday, famed supply-sider Arthur Laffer argues that higher taxes on the wealthy rarely work because the wealthy simply shift their income.”
 Dying to save taxes.
Laffer describes income-shifting as one response to increases in taxes. With regards to avoiding the federal estate tax, pundits have discussed a bleaker response.
In a May 30, 2001 New York Times op-ed, Reckonings; Bad Heir Day, Paul Krugman suggested that EGTRRA should be called the “Throw Momma from the Train Act of 2001.”
In The Costs of Estate Tax Dithering, 43 Creighton L. Rev. ___ (2010), Paul Caron writes,
Recall the Throw Momma from the Train clip I showed earlier. That is not an idle threat – at least two economics papers have demonstrated that estate tax changes can affect the timing of death.*
* Citing to Wojceich Kopczuk & Joel Slemroad, Dying to Save Taxes: Evidence From Estate-Tax Returns on Death Elasticity, 85:2 REV. OF ECON. & STAT. 256 (2003); Joshua S. Gans & Andrew Leigh, Did the Death of Australian Inheritance Taxes Affect Deaths?, 6:1 J. ECON. ANALYSIS & POL’Y 23 (2006).