[Phantom Lord]

The Laffer Curve is a no brainer and simple to understand.

At 0% tax rate, no revenue is generated for obvious reasons.

At a 100% tax rate, the taxed activity is extinguished.

So somewhere between 0% and 100% is an optimum rate that will generate the maximum amount of revenue. A rate above this will produce less revenue, and a tax increase when already above this will further decrease revenue. This is called the prohibitive zone.

When in this area, a tax rate reduction will INCREASE revenue.

However, if the rate is already below the optimum rate, a tax rate increase will increase revenue.

[LowCountryJoe]

You must not forget about the payroll tax, which, because it is spent on the current budget rather than the surplus invested in non-federal government issued assets, has a distorting effect on taxation schemes — taxation schemes that lower or raise income and capital gains taxes only.

[KamperKen]

“The Laffer Curve is a no brainer and simple to understand.”

I agree with the above, but you have to remember how dumb most politicians are, especially democrats (to be fair there are plenty of dumb republican politicians as well; the rate is merely a little lower).

I think the best discussion of economic theory and economic history, including the Laffer Curve, is the 1977 book, “The Way the World Works”, by Jude Wanniski. I’ve made numerous copies of the book gifts over the years.

Wanniski went off the deep end in his last years, but he was one of the architects of the Reagan/supply side revolution that’s swept the world by being acolyte and “propangandist” for the supply-side ideas, as enumerated by Laffer.

[RussP]

That’s a good way to explain it. And being on the “wrong side” of the curve is amazingly stupid because nobody wins. Even the big-government liberals and socialists lose because they have less to spend on their favorite welfare programs.

The only “winners” on the back side of the Laffer curve are people that just want to maximize misery so they can take over the government and save us (i.e., communists).

[conservatism_IS_compassion]

The Laffer Curve is a no brainer and simple to understand.

At 0% tax rate, no revenue is generated for obvious reasons.

At a 100% tax rate, the taxed activity is extinguished.

That is correct only for an income tax - a point which flummoxed Arlen Specter once in a televised hearing when he was trying to be a good guy by forcing the General Accounting Office (as the congressional bean counters were then called) into a reductio ad absurdum I forget what the taxable item being discussed was exactly, but let's say it was cigarettes:

• Spector: What is the tax revenue from the cigarette tax?

• Democratic GAO Aparatchik: $1 billion (or whatever it was).

• Spector: And what is the tax rate on cigarette?

• Democratic GAO Aparatchik:10% (or whatever it was).

• Spector: What would the revenue be from that tax if the rate were set to 20% ?

• Democratic GAO Aparatchik: $2 billion.

• Spector: What would the revenue be from that tax if the rate were set to 30% ?

• Democratic GAO Aparatchik: $3 billion.

• Spector: What would the revenue be from that tax if the rate were set to 40% ?

• Democratic GAO Aparatchik: $4 billion.

• Spector: What would the revenue be from that tax if the rate were set to 50% ?

• Democratic GAO Aparatchik: $5 billion.

• Spector: What would the revenue be from that tax if the rate were set to 60% ?

• Democratic GAO Aparatchik: $6 billion.

• Spector: What would the revenue be from that tax if the rate were set to 70% ?

• Democratic GAO Aparatchik: $7 billion.

• Spector: What would the revenue be from that tax if the rate were set to 80% ?

• Democratic GAO Aparatchik: $8 billion.

• Spector: What would the revenue be from that tax if the rate were set to 90% ?

• Democratic GAO Aparatchik: $9 billion.

• Spector: What would the revenue be from that tax if the rate were set to 100% ?

• Democratic GAO Aparatchik: $10 billion.

• Spector: I give up.

That was a blunder. The correct follow-on line would have been:

• Spector: What would the revenue be from that tax if the rate were set to 200% ?

• Democratic GAO Aparatchik: $20 billion.

• Spector: What would the revenue be from that tax if the rate were set to 400% ?

• Democratic GAO Aparatchik: $40 billion.

• Spector: What would the revenue be from that tax if the rate were set to 800% ?

• Democratic GAO Aparatchik: $80 billion.

• Spector: What would the revenue be from that tax if the rate were set to 160% ?

• Democratic GAO Aparatchik: $160 billion.

• Spector: What would the revenue be from that tax if the rate were set to 320% ?

• Democratic GAO Aparatchik: $320 billion.

• Spector: What you are saying, then, is that the entire federal budget can be funded by the cigarette tax. That is absurd. Mr. Chairman, I have no further questions of this witness.

[MrB]

Hillary has DEMONSTRATED her economic ignorance on many occasions.

I think she has a mental wall up in order to not understand it. That mental wall has communism written all over it.