This is a pretty good article, makes alot of great points.
Now this curve has been debated, and modified into a "neo-Laffer curve" giving it more of a turbulent trend than the basic inverse parabola above. The article addresses this.article wrote: Laffer’s graph begins with no tax revenue at 0% tax rates. Revenues rise to a maximum as tax rates increase. As tax rates increase beyond that point, revenues diminish until, at the 100% tax rate, there is again no revenue. It looks like an inverted U, having only one maximum. The maximum occurs somewhere between the extremes, and defines the rate of taxation that produces the maximum revenues.
Social-justice sophisticates ...... for example, Mr. Obama himself, who in an interview acknowledged the existence of the laffer curve based rate/revenue relationship, but ignored its implications by stating that his plan to raise tax rates was NOT about revenues, but about "fairness".article wrote: Mathematician Martin Gardner wrote a satirical treatment of Laffer’s theories and introduced the neo-Laffer curve, loosely based on empirical evidence. The neo-Laffer curve only looks like the Laffer curve near 0 and 100 percent taxation; in a wide middle range the curve is a chaotic “snarl”. When in the middle range, revenues can go up or down and do so unpredictably. Here revenue change cannot be predicted based on changes in tax rates. The neo-Laffer curve is generally used to rebut arguments that lowering tax rates will increase revenues. Perhaps deliberately unnoticed by Gardner’s sophisticate readers, the neo-Laffer curve also rebuts notions that raising tax rates will increase revenues.
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A government that relies on Gardner’s thinking to justify increasing taxes is saying that we might as well raise taxes. After all, according to Gardner no one can prove that raising taxes will reduce revenues and it might in fact raise them. However, the taxpayers can say with equal accuracy that we might as well lower taxes; after all, according to Gardner no one can prove that lowering taxes will reduce revenues and it might in fact raise them.
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Lower taxes result in more economic activity and growth: producers retain more and with fewer resources there is less government to interfere. This should be taken into account when reviewing tax policy but is often ignored by those who justify their policies through economic theories like those of Gardner. Contrary to Gardener’s conclusions, we should not have rates that put us into the unpredictable snarl at all; tax rates should instead be below the beginning of the snarl. Above that level, higher rates cannot be relied upon to increase revenues and could lower them. Regardless of where we are on the Laffer/Gardener curve, lower rates positively affect economic growth. If tax rates are above the initial predictable zone in either the Laffer or Gardner curves, we might as well lower tax rates and get the reliable benefit of economic growth. Such simple farmer logic falls on deaf ears among those who privately shun prosperity and freedom, the most notable of whom are social-justice sophisticates.
What is interesting is when you couple the effects of this curve, and the fact that the CBO is NOT allowed BY LAW to consider real world market forces when conducting tax policy studies, but holds to the "all things being equal", which is usually only used for raw theory studies, not real world studies.
The article tries to lose you toward the end, as it incorporates roman empire slavery analogies. Even still, there are solid points made.
article wrote: Other research purports to show that if our government lowers taxes according to Laffer’s theories, it will not make up the difference for decades. This is taken as evidence that the government should not lower taxes. The almost immediate effects on revenue observed after past tax reductions belie these claims. But even if it would take decades to recover “lost revenue”, their derived conclusion could only make sense if the government is in a zero-sum game against its slaves, and a dollar spent by government is infinitely better than any dollar used in any other way. This would include any potential use by the slave who earned it. This kind of thinking has crept into the everyday discussion of tax policy; when any of us keeps a dollar that we earned, it is counted as a “cost” to the government.
article wrote: President Obama promotes social-justice sophisticate policies that we know will fail. We have repeatedly learned this through mass suffering when social-justice acolytes impose their core belief systems on populations around the globe. Social-justice sophisticates never seem to tire of the predictable suffering, yet his state of the Union Speech last week spoke of a vibrant future. He enumerated as many desirable outcomes as would fit, and promised that they are all coming to a theatre near you, and you, and you. Like old Soviet 5 year plans, it gave us glowing descriptions of progress somewhere in the future brought to you by the biggest impediments to achieving progress or freedom—its social-justice sophisticate authors and the nature of the plan.
