WSJ: Real Tax Cuts Have Curves -- George Bush proves Art Laffer right -- again.

Wall Street Journal ^ | June 13, 2005 | STEPHEN MOORE

[OESY]

[Coop]

I think if people would "sell" this concept in the below terms, more folks might understand it.

Let's say a company is selling sodas for $1.50 and making $1.25 profit per can. Then I come in as the new CEO and order prices lowered to $1.00 per can. Now, our profit margin will go down, but what happens to our sales volume? It goes up, and once it goes up enough our total profit will exceed the total profit the company would have achieved by keeping prices the same.

Just consider taxes "prices."

[Blood of Tyrants]

We are still far on the high side of the optimal tax rate.

[Eric in the Ozarks]

And we'll stay there as long as we elect Rupublican geldings to Congress.

[bubman]

BUMP

[traviskicks]

bookmark ping.

looks very interesting. I'm reading Unlimited Wealth by Paul Zane Pilzer and he has a great section on how supply side worked in the Reagan admin. The problem was government spent more than extra tax dollars that were generated by the cuts....

[Alberta's Child]

The numbers are an eye-popping vindication of the Laffer Curve and the Bush tax cut's real economic value. Federal tax revenues have surged in the first eight months of this fiscal year by $187 billion. This represents a 15.4% rise in federal tax receipts over 2004. Individual and corporate income tax receipts have exploded like a cap let off a geyser, up 30% in the two years since the tax cut.

The basic premise of the Laffer Curve is correct, but the numbers posted here represent a disingenuous argument in favor of lower tax rates. This is because they don't take two critical points into account: 1) the impact on gross tax receipts of the ever-increasing number of filers who are subject to the alternative minimum tax (who can't take advantage of the lower income tax rates), and 2) the "positive" impact of massive deficit spending on both corporate and individual income tax receipts.

[Rammer]

Coop - that's a great analogy that people will understand. However, it assumes that the demand for sodas is elastic enough to increase volume to a point that the increased sales offset the decrease in price.

[Mariposaman]

I once heard a Demorat admit on television that even if it could be proven that lower taxes equated to more revenue, Demorats still wouldn't support the idea. It all hinges on their belief that it's wrong for some in our society to do better financially than others; with progressive taxes used as punishment.

[justshutupandtakeit]

Suuure we just need more RATS in Congress. Just which party do YOU think has been cutting taxes? And which party has fought them kicking and screaming all the way?

Or were you quoting DU's oh so clever names for Republicans?

[patriot_wes]

Bartley once authored a brilliant expose of the positive effects of the Reagan tax cuts. We should find the report excerpts and flood Dem disinformation sites with it.

[OESY]

The interesting development here was that the hacks in the MSM stopped ridiculing it as "Reaganomics" when it began to work. Then they condemned the 80's as "The Decade of Greed" but quickly did an about face when the prosperity continued under Clinton -- that is, until his bubble burst. They then looked to the incoming Bush administration to blame for the fallout.

[justshutupandtakeit]

AMT filers have not gone up 30% the last two years. If you are referring to deficit stimulation of the economy increasing tax revenues the impact would be lagged and not affecting the economy quickly enough to increase taxes so quickly. Besides there is a theoretic problem even if it were. i.e. a deficit which increases revenue is self liquidating which I don't think anyone believes is the case in reality.

[ran15]

The Laffer curve should be pasted on the ceiling above every child's bed.. and their parent's beds as well.

[SandyB]

They just reported the federal budget numbers for this month, and it is a DEFICIT! of over $35 billion, for just one month!

[Eric in the Ozarks]

They are in the jockey's position but can't ride. What else would you call em ?

[spacewarp]

I think he may have been referring to the RINO's.

Those who want to claim the Republican label, yet the Democrat love for taxes and tax abuse of citizens.

Paul

[Alberta's Child]

I'll have to do some research to see how the revenue breaks down for "standard" income tax filers vs. AMT. One of the bizarre side effects of the reductions in income tax rates is that many people suddenly found themselves paying the AMT simply because their reduced income tax rates dropped them below the AMT threshold.

[T. Buzzard Trueblood]

The theory is really one of the simplest concepts in economics. Yet its logic continues to elude the class-warfare lobby

Too true.

[lilylangtree]

"Yet its logic continues to elude the class-warfare lobby whose disbelief is unburdened by the multiple real-life examples which validate its conclusions."

WA gov Christine Fraudoire and the demoncRATS controlling the House and Senate are just several suffering from loss of logic.