Forbes (and Data): Art Laffer is wrong... consistantly.

Actually, they do. Libs believe the "correct" tax rate is the one which maximizes revenue. But how much economic growth can there really be at the tax rate just below the point where the economy contracts? Answer: Zero.

No, "Libs" believe the "correct" tax rate is one that brings in the approximate amount of money required to fund the services provided by the government.

That an uninformed populace is the most easily manipulated? Yeah, UA's got that down...

You can't honestly be that stupid.

Excellent rebuttal.


You win the thread.

I would argue that the best answer to this question is neither.

People working government implies the government lords over the people which is anathema to free people in a free society.

Government working for the implies that the government is a patron to the people which also is anathema to free people in a free society.

The idea behind the Laffer curve is mathmatically incontrovertible.

If you tax people at 0%, what revenue do you get? Obviously, ZERO.

If you tax people at 100%, what revenue do you get? Maybe not so obviously, but ZERO. Who would work if they could keep NONE of their income? Would you work your job for NO pay?

What does the curve look like in between? Who knows? But one thing is certain, as rates increase from zero revenues will increase until, at some rate, revenues will hit a maximum. Then revenues will decline down to zero at 100% taxation. Due to the complexity of the economy, there might be all sorts of little bumps and wiggles in the curve, but the idea that a maximum occurs somewhere in between is undeniable.

What this means is that there is point beyond which a tax increase is counterproductive in terms of generating revenue. Estimates are all over the place, but my guess is that it's well short of 100%! Would you work if the tax rate on your labor were 80%? Would it make sense for you to?

Alas, the problem there is that there seem to be no end to these government "services." Any time there's a little spare wealth in the economy, liberals want to seize it to fund some program that no one's ever wanted or needed.

Your entire argument is dependent on the idea that had the tax cuts not been put into place, the economy would not have grown, which, like most of economics, relies on a pretty big assumption that may not hold true in the real world.

I envision that sorting itself out by way of a few billion quickly dying off. Might even be worth looking into what we can do to speed up the process.

Really? Because my taxes went down last time the Liberals were in power in Canada. So did the amount of money the government spent on programs.

So if the title is "investment counsellor" and they withhold information like "your floating rate could realistically quadruple"?

How about if they sell it to you with the reassurance that such a thing would never happen?

Seems to me they fail to provide what's paid for: expertise.

The simple science behind the concept makes it good for political rhetoric

At the same time it's rather an useless theory for actually estimating a good marginal tax rate.

I would say the actual debates in congress about marginal taxes mostly boils down to 39% versus 33% now days. The concept of the Laffer curve is rather irrelevant in that arena.

DP

The "it would've happened anyway" argument is very, very weak. Even if you discount the theory that predicts the outcome, the fact that the outcome followed the action is a strong indicator that the action had effect.

Besides, if you think that economics isn't a science, then you should refrain from offering advice about economic policy. If it's just one big random miasma, then your advice is meaningless.

As long as some people believe it is impossible to increase revenues by cutting taxes, the concept is still very relevent.

Correlation implies causation now?

If it's right there in the fucking paperwork you sign and the mountain of supplemental materials you are given along with it, you are not a victim of "fraud".

You're still just trying to hang a dignified face on your expectation that they protect grown-ass adults from their own lazy ignorance. "Fraud" doesn't enter into that equation.

Good for Canada.

I've never gotten a tax decrease from an American liberal. American liberals can't cut worthless programs even when they don't have the money to pay for them.

Ceteris paribus, the economy always grows more with less taxes. It's not like the tax curve which has two slopes and a peak.

For who? The general public or the actual technocratic people in the government who designs the tax schedules? I doubt the latter is not aware. I obviously meant the latter when I said "in that arena".

You missed the part about discounting economic theory.

More money in the private economy is more money that gets invested in growth, either directly or in response to greater demand.

If you don't think it makes a difference, take it all.

For the general public, who are mainly completely ignorant of economics.

For the politicians, who mishandle our tax system by using it for class warfare, etc.

No. Government working for the people implies that the people are the patrons. People pay for the government through taxes, and the government delivers services. That sounds exactly like government works for the people.

Yet our funding priority seems to be "What's the policy that raises the most revenue for government?" -- As if paying for government is the most important reason people go to work.

If that is the case, anyone who invoke the Laffer curve should make it clear to the public that either actions can result in either outcomes depending on the initial state i.e. left or right of the optimal point.

It always seemed to me Laffer curve is only used as a tool for hammering home the idea that decreasing the top marginal rate increases tax revenue.

In that sense, the Laffer curve can also be used to hammer home the opposite scenario.

Therefore it baffles me why do people still use it as part of their political rhetoric when the important questions are:

Where is the optimal point?

What is the optimal point's sensitivities to various inputs from the government and from the people?

Is the optimal point time-varying?

Is the Laffer curve smooth or is it discontinuous?

Are there multiple local optimal points?

Is so which one is the most desirable or if indeed the optimal point is desirable at all when other economic factors are taken into account?

All these are tough questions that economists cannot answer with any certainty which instead leads us to an endless good ole ideological debate. Not that I am against having ideological debates hence my presence on this forum.

Of course anyone who raises taxes is a "liberal" anyone who cuts them is a "conservative". Perfect.

That is one possible interpretation. The other more insidious interpretation of government working for the people is that the government should be provide more welfare and benefits to the people.

I still stand by my position that neither is the best answer.

I'll take "Things I Never Said" for $800, Alex.

Of course, there is a pretty strong correlation there. I can think of few liberals who AREN'T in favor of higher taxes (to fund useless programs, to punish their clients' class enemies, etc.) and few conservatives who are...

Which might be a decent argument if government didn't get the money for welfare and benefits FROM people.

True but I was more or less referring to the "vote for the person who'll give me more welfare and benefits by taxing the rich" crowd.