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To: Torie
The Laffer Curve is a fraud. Of course at some level it does obtain, but not at the 50% level.

The Laffer curve is not a fraud. It may be a tautology, a truism, or self-evident, but it isn't a fraud. The question merely is at what tax rate produces maximum revenue to the government over a period of time. The curve exists, and depending where the maximum is, tax cuts might result in increased revenue.

Two additional points:
(1) the rate that produces maximum government income probably is not universal, but changes for a given society based on a variety of social factors.
(2) You're wrong to focus purely on a person's marginal incentive to work. High taxes distort the economy and reduce growth in other ways--primarily be diverting investment from the most productive use to other uses that are tax favored or to consumption. Therefore, a reduced tax rate may not affect hours worked but still increase government revenue due to greater economic growth than otherwise would have occurred.

111 posted on 05/04/2002 6:07:58 PM PDT by the bottle let me down
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To: the bottle let me down
I agree with everything you said. And tax favoritism is in general bad. It is a form of government spending that in general is not conducive to producivity, but rather to economic distortion. In general, it should be resisted. Schedule A is mischievious, albeit less than before.
114 posted on 05/04/2002 6:10:31 PM PDT by Torie
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To: the bottle let me down
The question merely is at what tax rate produces maximum revenue to the government over a period of time

And if torie were so well educated in Econ, she may remember Econ 101 (MY prof was Les Aspin...)

In 101, you learn that there is a pair of curves describing increasing price and decreasing sales. The idea, of course, is to maximize sales. Thus you pick the point on the curve which represents the maximum volume as the sales price--and figure out how to make your profit at that price.

Only difference with Gummint is that Gummint has no interest in economic niceties--only in self-perpetuation.

In THAT sense, the Laffer curve is a myth. Nobody in Gummint takes seriously the idea that 'less cost' is important.

139 posted on 05/04/2002 6:49:40 PM PDT by ninenot
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