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Kurt Hauser is a San Francisco investment economist who, 15 years ago, published fresh and eye-opening data about the federal tax system. His findings imply that there are draconian constraints on the ability of tax-rate increases to generate fresh revenues. I think his discovery deserves to be called Hauser's Law, because it is as central to the economics of taxation as Boyle's Law is to the physics of gases. Yet economists and policy makers are barely aware of it. Like science, economics advances as verifiable patterns are recognized and codified. But economics is in a far earlier stage of evolution...

A seven and one half minute explanation of what the Laffer curve is. This is one of three parts; the remaining two have not been posted at YouTube yet. Enjoy! http://www.youtube.com/watch?v=fIqyCpCPrvU

Over the past 30 years, the U.S. has seen large changes in income tax rates as well as other tax rates. And, as would be expected, the budgetary implications of these tax changes have once again become a hotly debated partisan issue. But missing from the discussion are the huge differences in how the top 1% of income earners respond to changes in tax rates versus, say, the bottom 75% or 80% of taxpayers -- the so-called middle class and lowest income groups. The "rich" quite simply are not like the rest of us. (snip) The important point here is...

Forty-five years ago this week, President John F. Kennedy announced a startling economic discovery. He tried to educate the American people about why he was cutting taxes – not that the American people or any other people have ever needed to be persuaded to cut taxes. In a news conference Nov. 20, 1962, he said: "It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. ... Cutting taxes now is not to incur a budget...

Jonathan Chait is one of the Founding Fathers of Bush Derangement Syndrome. Way back in '03, the New Republic senior editor authored one of BDS's early, seminal works: "The Case for Bush Hatred," whose very first line was the unequivocal: "I hate President George W. Bush." Ah, but Jonathan Chait isn't a mere one-hatred man. As of this morning, we can conclusively state that in addition to his animus toward our nation's chief executive, Jonathan Chait also hates lower taxes. In his New York Times column "Captives of the Supply Side," Chait directs his ire at lower federal taxes in...

Some good news on the tax cutting front: Last week lawmakers approved an 8.9 percentage point reduction in the corporate income tax rate. Too bad the tax cutters are Germans, not Americans. There's a trend here. At least 25 developed nations have adopted Reaganite corporate income tax rate cuts since 2001. The U.S. is conspicuously not one of them. Vietnam has recently announced it is cutting its corporate rate to 25% from 28%. Singapore has approved a corporate tax cut to 18% from 20% to compete with low-tax Hong Kong's rate of 17.5%, and Northern Ireland is making a bid...

Twenty-five years ago this weekend, Ronald Reagan signed the Economic Recovery Tax Act. The bill cut personal income tax rates by 25% across the board, indexed tax brackets for inflation and reduced the corporate income tax rate. The anniversary is worth commemorating as a seminal moment that continues to influence policy for the better in the U.S., and around the globe. The achievement of Reaganomics can only be fully understood by recalling the miserable state of affairs a quarter-century ago. Newsweek summarized the national mood when it wrote in 1981 that Reagan "inherits the most dangerous economic crisis since Franklin...

Surprising Jump in Tax Revenues Curbs U.S. Deficit By EDMUND L. ANDREWS WASHINGTON, July 8 — An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief. On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has...

Those familiar with the history of twentieth 20th-century economic thought know of the dominance of "Keynesian economics" following the Second World War. While John Maynard Keynes typically receives credit for transforming economics, much postwar Keynesian economics was actually developed by his interpreters and followers. Perhaps the single most important one of these followers was the Romanian born economist Abba P Lerner. Keynes's book The General Theory of Employment, Interest, and Money popularized the notion that market economies were prone to persistent unemployment. Keynes often receives credit for promoting government deficit spending as a means of combating unemployment. However, Abba Lerner...

Despite the grim picture the mainstream media continue to paint about just about everything -- the insurgent-ridden reconstruction effort in Iraq, the looming Iran threat, the failed Dubai Ports deal, the twin deficits, the president's sagging poll numbers, the Jack Abrahamoff scandal, and on and on -- there's one thing they just can't taint: This U.S. economy remains very healthy. It's always amazing to listen to conventional demand-side economic pundits and mainstream reporters who try as hard as they can to minimize the excellent performance of the American economy ever since lower marginal tax-rate incentives were put into place almost...

I’m not just saying it — CBO is. On Thursday the Congressional Budget Office released its annual Budget and Economic Outlook, and buried in one of its nearly impenetrable tables of numbers is a remarkable story that has gone entirely unreported by the mainstream media: The 2003 tax cut on capital gains has entirely paid for itself. More than paid for itself. Way more. To appreciate this story, we have to go back in time to January 2003, before the tax cut was enacted. Table 3-5 on page 60 in CBO’s Budget and Economic Outlook published in 2003 estimated that...

Ronald Reagan once said an economist is someone who sees something that works in practice and wonders if it would work in theory. So why is it that when confronted with a concept that works in both practice and theory, so many people refuse to believe it? The Laffer Curve, popularized by economist Arthur Laffer, says the government can maximize tax revenue by setting the tax rate at ... The logic is obvious on the ends of the spectrum: if the tax rate is 0%, the government collects no money. If it is 100%, people have no reason to earn,...

Increase of 2.8 cents a gallon will begin Jan. 1 -- the biggest one-time jump in nearly 20 years, the N.C. Department of Revenue told the Observer Thursday. The latest tax increase, to 29.9 cents a gallon, will push North Carolina from having the nation's eighth-highest state gas tax to the sixth. "They're imposing a higher tax when the pain will be getting worse," said Mark Cooper, research director for the Consumer Federation of America. Republican state lawmakers proposed capping the gas tax at 24.6 cents to ease the pain of pump prices that passed $3 after Hurricanes Katrina and...

The final budget numbers got very little attention. .... And it turns out that these numbers paint a fairly encouraging picture. ... Perhaps that’s why they didn’t get much coverage

Invented by Arthur Laffer, this curve shows the relationship between tax rates and tax revenue collected by governments... as taxes increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100% , then all people would choose not to work because everything they earned would go to the government.

WASHINGTON (AP) -- A record amount of tax revenue flowed into federal coffers in July, helping to keep the government on track to significantly lower the budget deficit this year. The Treasury Department reported Wednesday that revenue collections jumped 5.7 percent last month from a year ago, pushing total receipts to $142.09 billion, the largest amount ever collected by the federal government in the month of July. The Bush administration last month significantly lowered its estimate for this year's budget deficit - to $332.65 billion, down 22 percent from its February estimate that the deficit this year would total $427...

Strong gains in corporate profits, household income and home sales are swelling tax revenues for states nationwide, helping to close budget gaps and boost spending. State-tax revenue for the July-March period of the fiscal year ending June 30 reached $387 billion, up 9.5% from the year-earlier period.... Tax collections in the January-March quarter were up 11.7%, the strongest year-on-year growth for that period since at least 1991. The institute also says that if the current pace continues, states are on track to take in a record $550 billion for the full fiscal year, which ends June 30 for most states.......

As legend has it the famous Laffer Curve was first drawn by economist Arthur Laffer in 1974 on a cocktail napkin during a small dinner meeting... attended by the late Wall Street Journal editor Robert Bartley and such high-powered policy makers as Dick Cheney and Donald Rumsfeld. The Laffer Curve helped launch the Reaganomics Revolution here at home and a frenzy of tax rate cutting around the globe.... The theory is really one of the simplest concepts in economics. Yet its logic continues to elude the class-warfare lobby whose disbelief is unburdened by the multiple real-life examples which validate its...

Dutch moving to be latest tax cuttersEurope's race for a friendlier environment for investing By Steve Goldstein, CBS MarketWatch.com Last Update: 10:51 AM ET Sept. 21, 2004 LONDON (CBS.MW) -- When the Dutch government Tuesday unveiled its corporate tax cut plan, it because just the latest in a series of fiscal policy moves by European countries seeking to woo more investment. The Netherlands has proposed to lower taxes from a current nominal rate of 34.5 percent to 30 percent by 2007, a Finance Ministry spokesman said. The nation's economy is overdue for some stimulation. Gross domestic product is on the...

Since Ronald Reagan's death, many inspiring speeches have been delivered and adulatory articles written about his presidency. But few of the tributes have recognized Reagan's greatest achievement, which was indispensable to the U.S. triumph in the Cold War and is crucial for the current war on terrorism. Reagan tapped the creativity of America's entrepreneurs to bring about a global, not just a national, economic revolution. Poets describe creativity as "Promethean," referring to the mythical hero who brought fire to the earth. A Promethean era in world history, the Reagan presidency lit the fires of American creativity - and they have...

Some of you may share the mistaken belief that the Laffer Curve, named for Dr. Arthur Laffer, was tested and found wanting during the Reagan Administration. Nothing could be farther from the truth. There are two possible causes for your error. The first is that you may simply not know what the Laffer Curve is. This, combined with a natural tendency to agree with the "conventional wisdom," may lead you to just mindlessly nod your head in agreement every time you hear some T.V. network reporter blithely dismiss the "discredited Laffer Curve." The second possible cause for your error may...

Get Lucky by Jonathan Chait Post date 12.17.02 | Issue date 12.23.02 One of the things that has fascinated me about The Wall Street Journal editorial page is its occasional capacity to rise above the routine moral callousness of hack conservative punditry and attain a level of exquisite depravity normally reserved for villains in James Bond movies. To wit, a recent lead editorial titled "THE NON-TAXPAYING CLASS." A reader unfamiliar with the Journal's editorial positions might read this headline and assume it refers to ultra-wealthy tax dodgers. But no--the Journal, of course, approves of such behavior. The non-taxpayers it denounces...