Posted on 06/25/2019 9:41:48 AM PDT by SeekAndFind
Most people plod through life, having an impact on their family and friends, but not much on the rest of humanity. Rulers and despots can impact most everyone’s life, as can those who are responsible for great scientific or engineering breakthroughs. Some musicians and athletes bring pleasure to millions. In other fields, such as economics, it is hard to identify individuals who created much in the way of pleasure or pain, or even directly useful knowledge for his or her fellow man.
President Trump awarded the Medal of Freedom, the nation’s highest civilian honor, to economist Arthur B. Laffer, the “father of supply-side economics,” this past Wednesday. For more than four decades, Art Laffer has had an impact on his fellow Americans and many other people around the world, whether they recognized it or not.
Art Laffer became famous for a concept that he did not develop (the idea behind the Laffer Curve had been known for a couple of thousand years) — and for something he did not say — and that is that all “tax cuts pay for themselves.” What Art and many of the rest of us have said is that some tax-rate cuts, like those on capital gains, often “pay for themselves” in a year or so. Other tax-rate reductions never do — but given enough time, tax-rate reductions on labor and capital, particularly from high levels, can pay for themselves by increasing long-run size of the economic pie because of the additional work, saving and investment they engender.
Several years ago, I calculated that the Reagan tax cuts took seven years to “pay for themselves” — still well worth doing. The Laffer Curve (see accompanying illustration) is a graph showing that, at a tax rate of zero or 100% , the government receives no revenue
Really?
You have to admire an economist named Laffer.
The thing I never liked about the Laffer Curve is that it suggests that maximizing government revenue is a good thing.
He had to put it in language even a member of Congress could understand.
It really doesn’t suggest that.
Looking at the Laffer Curve it seems that below that midpoint horizontal line reductions in tax rates correspond to reductions in government revenue, giving the lie to the notion that tax cuts “always pay for themselves.”
Perhaps, but the dismissal of the Laffer curve by the left shows they don’t give a damn about revenues and are more interested in absolute control of individual finances.
I’ve never taken it that way. While it provides an important basis for understanding how to maximize revenue it doesn’t claim that should be the goal.
The problem, of course, is that our politicians think it should be.
Yes, yes, yes!!!
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