Laffer Curve?

Discussion in 'Economy' started by proletarian, Mar 4, 2010.

  1. ☭proletarian☭
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    ☭proletarian☭ Guest

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    Is this accurate?

    [ame=http://www.youtube.com/watch?v=fIqyCpCPrvU]YouTube - The Laffer Curve, Part I: Understanding the Theory[/ame]

    [ame=http://www.youtube.com/watch?v=YsB_rnzBA08]YouTube - The Laffer Curve, Part II: Reviewing the Evidence[/ame]

    [ame=http://www.youtube.com/watch?v=lztGNZdWRY4]YouTube - The Laffer Curve[/ame]
     
  2. California Girl
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    California Girl BANNED

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    I haven't watched in detail but, yeah, I would say it is.
     
  3. antagon
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    antagon The Man

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    while i couldnt be bothered to watch the videos, i'd say there's a laffer curve equillibrium around clintons tax rate, at the time. reagan found one as well, then plowed on past it, into the deficit culture our government indulges in now. the carnegie treasury, too.

    i would also posit that the curve couldnt sustain its effect - tax rate changes elicit reactionary results, which normalize after a fairly short period. better to regularly change the tax rate than to seek an eldorado rate imho.
     
  4. Toro
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    Toro Diamond Member

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    I didn't watch the video. There is no evidence, nor any reason to believe, that the income tax rates of the United States were ever on the right side of the Laffer Curve, at least over the last few generations. Maybe there was when the highest marginal rate was 91%, but not in recent times. The assertions made by Arthur Laffer in the 1970s and 1980s were merely that, assertions. He had no empirical evidence to back him up.

    A few years ago, Gregory Mankiw, estimated that for every $1 in income tax cuts, the government lost 83 cents in revenues, which would the Laffer Curve is irrelevant in the US. Mankiw was former Chair of the Council of Economic Advisers for President Bush.

    http://www.usmessageboard.com/economy/51330-the-laffer-curve-is-wrong.html
    http://www.usmessageboard.com/econo...know-if-bush-tax-cuts-pay-for-themselves.html

    And

    Debunking One of the Worst Ideas in Economics
     
    Last edited: Mar 4, 2010
  5. editec
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    editec Mr. Forgot-it-All

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    So obviously since we cut corporate taxes so much in the last few decades, our economic is going gangbusters and hiring people like crazy, right?

    I don't doubt there is validity to the theory that lowered taxes might create more tax revenues. I don't doubt that one bit in extreme cases of taxation

    What I doubt is that we can know that will be the effect in every case where some tax increase or decrease occurs.

    My point here is that rate of change due to the Laffer curve just isn't consistent over time, folks.

    If it was, we'd always maximize tax revenues and never change the corporate rates from that tax rate sweet spot.

    Here's what I know...

    If ehnough people are working, and those people are making a truly living wage, corporate tax revenues will go up, because corporations will see opportunity to make money and invest to do so, regardless of the tax rate.

    Convversely, if not enough people are working and making a truly living wage, then corporations are no encentized to invest because they do not see opportunity to make more money by increasing supply since there is no demand.

    Changing the tax rates is far less important to the activity of corporations than the state of the economy, regardless of the tax rates.
     
    Last edited: Mar 4, 2010
  6. antagon
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    antagon The Man

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    got to agree with that. there certainly is no truth to the mythical 'cut and they'll hire' conjecture.
     

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