There’s nothing wrong with the Laffer curve—only with the uses people put it to. Wanniski and the politicians who followed his panpipe fell prey to the oldest false syllogism in the book:SalonIt could be the case that lowering taxes will increase government revenue;
I want it to be the case that lowering taxes will increase government revenue;
Therefore, it is the case that lowering taxes will increase government revenue.
Math vs. Reaganomics: Why GOP’s anti-tax hysteria falls flat
Jordan Ellenberg | Vilas Distinguished Achievement Professor of Mathematics, University of Wisconsin
3 comments:
"That means the curve recording the relationship between tax rate and government revenue cannot be a straight line."
What about how much the govt spends in the first place? doesnt that count?
this guy may not live in downtown "libertopia" but he at least lives in the suburbs and commutes there every day...
"More moderate supply-side thinkers, like Mankiw, argue that lower taxes can increase the motivation to work hard and launch businesses, leading eventually to a bigger, stronger economy, even if the immediate effect of the tax cut is decreased government revenue and bigger deficits."
In the MMT model, lower taxes increases currency supply making $s easier to get which could increase inflation. However in the Supply Side model as the above statement suggests, lower taxes raises the after tax return on capital providing incentives to produce adding to the supply of goods and services, which in turn would offset inflation.
14th century Arab historian Ibn Khaldun, said: “At the beginning of the empire, the tax rates were low and the revenues were high. At the end of the empire, the tax rates were high and the revenues were low.”
That was all under the metals in the 14th century Ed and this type of thing goes back even further to the Babylonians:
"Behold Me rousing against them the Medes, who are not accounting silver, And gold - they are not delighting in it." (Isaiah 13:17)
Once a nation loses sight of authority, they have to resort to whatever steps they deem necessary to try to make it work ....
So when an empire is first established, history probably shows usually thru military means, authority is in its strongest view, and not much taxes are necessary...
then as this view of authority starts to fade, ie libertarianism starts to creep in, the sovereign (who it may even come to pass ends up being a libertarian him/herself) has to resort to higher taxes as that sovereign starts to think they are "out of money!" ie they are "out of authority" and the whole thing degrades into chaos, thievery, pillaging, etc...
This has been going on in the west for almost 2,000 years since the "fall of Rome" (which should rather be termed "the nations lost view of authority") until the 20th century when we got out from under the metals and have re-claimed our human authority over these our economic systems ...
Though some "clean-up" actions are obviously still being fought ;)
rsp,
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