Laffer: How To Fix The Economy

[elvis]

As does every single frigging economist in the World.

Just what we need, the return of the completely theoretical Laffer Curve.

While we are at it, can anyone tell me with any degree of confidence if the Laffer Curve is a perfect Bell or skewed to the right or left.

I mean, if we are going to preach the miracles of it, we should at least be able to describe it's shape.

don't be silly. its obviously very imprecise but deadly accurate in terms of the relationship between tax revenue and the size of the economy

Whose being silly?

Here:

Here is a theoretical Laffer Curve (that assumes a perfect bell). Now show me where we are at on the curve and why.

Numbers please. Not opinions.

Oh, by the way. As you see: t* lays at the 50% line. The income tax for the highest income bracket in this country is currently 35%.

the top bracket was around 70 when the curve was invented.

 

[geauxtohell]

But, let's just follow your logic out and ask the obvious: how did that work the last time we tried it?

of course as a liberal you will not be able to follow these arguments but lets try anyway.

1) it always works well, the larger the economy the larger the tax revenue.

2) the 2003 Supply side tax cuts produced the greatest increase in revenue in American History!

No, you are giving me your opinions. Not numbers.

BTW, your assertion is wrong on multiple levels.

So no, the reduction in the capital gains tax rate from 20% to 15% in 2003 did not result in an increase in revenue over the course of the business cycle. In 2000 receipts totaled $119 billion, which equals $143 million in 2007 dollars. In 2007, they totaled $122 billion. That's a 15% decline.

It wasn't the "greatest increase in revenue in American History!". It was a loss of revenue.

Read more: Do capital gains tax cuts increase revenues? - The Curious Capitalist - TIME.com

 

[elvis]

if the laffer curve works, why isn't the economy growing right now? we have the lowest taxes in 50 years.

 

[geauxtohell]

don't be silly. its obviously very imprecise but deadly accurate in terms of the relationship between tax revenue and the size of the economy

Whose being silly?

Here:

Here is a theoretical Laffer Curve (that assumes a perfect bell). Now show me where we are at on the curve and why.

Numbers please. Not opinions.

don't be a silly goose liberal, its obviously very imprecise, and with variables that no one can account for precisely

In other words, you can't make any sort of numerical argument for your opinion. It's just something you believed?

I mean, you aren't even going to try.

Faith based economics. Dig it.

 

[geauxtohell]

don't be silly. its obviously very imprecise but deadly accurate in terms of the relationship between tax revenue and the size of the economy

Whose being silly?

Here:

Here is a theoretical Laffer Curve (that assumes a perfect bell). Now show me where we are at on the curve and why.

Numbers please. Not opinions.

Oh, by the way. As you see: t* lays at the 50% line. The income tax for the highest income bracket in this country is currently 35%.

the top bracket was around 70 when the curve was invented.

And even then, Reagan misjudged where we were at on the curve. We were still to the left of t*.

 

[iamwhatiseem]

Arthur Laffer has probably done more damage to the intellectual bearings of American conservatives in this country than anyone else in the last 50 years.

Really? Based on what?

By imbuing a deeply held belief in the American right that pretty much no matter what the rate of tax - any tax - it can be cut and pay for itself.

Most conservatives around the world don't believe this. But they do in America.

Indeed.
As tragically stupid it is of the Democrats to take entitlements off the table, as is the Republicans to take revenue off the table...beginning with the 51% of Americans who have a negative tax liability.

 

[zzzz]

I'm afraid we have passed a critical point both politically and economically to where there is no hope. The divisiveness in this country and the entrenchment of special interests in the political process have put this country on a path to disaster. Is there a way out? There are 2 ways to get out of this downward spiral and they are:
1. An event to happen to pull us together again, to make us work together for the good of the people and the country.
2. A leader, a person who can pull everyone together, who through their persona can mobilize the people. Someone like Reagan. Oh I can hear many liberals deride him but he won in landslides so Democrats voted for him too.

Hopefully scenario 2 will come about and not some calamity. I reckon a DEPRESSION will be a calamity too and if one comes I shudder to think how ling it will take to recover from it.

 

[Brutus]

But, let's just follow your logic out and ask the obvious: how did that work the last time we tried it?

of course as a liberal you will not be able to follow these arguments but lets try anyway.

1) it always works well, the larger the economy the larger the tax revenue.

2) the 2003 Supply side tax cuts produced the greatest increase in revenue in American History!

No, you are giving me your opinions. Not numbers.

BTW, your assertion is wrong on multiple levels.

So no, the reduction in the capital gains tax rate from 20% to 15% in 2003 did not result in an increase in revenue over the course of the business cycle. In 2000 receipts totaled $119 billion, which equals $143 million in 2007 dollars. In 2007, they totaled $122 billion. That's a 15% decline.

It wasn't the "greatest increase in revenue in American History!". It was a loss of revenue.

In constant 2005 dollars tax revenue went after the 2003 supply side tax cuts from 1.8 trillion to 2.414 trillion according to OMB
numbers
1,901.1 6,537
2004 16.1 1,949.5 6,642
2005 17.3 2,153.6 7,271
2006 18.2 2,324.1 7,773
2007 18.5 2,414.0 7,993
2008 17.5 2,288.5

 

[geauxtohell]

of course as a liberal you will not be able to follow these arguments but lets try anyway.

1) it always works well, the larger the economy the larger the tax revenue.

2) the 2003 Supply side tax cuts produced the greatest increase in revenue in American History!

No, you are giving me your opinions. Not numbers.

BTW, your assertion is wrong on multiple levels.

So no, the reduction in the capital gains tax rate from 20% to 15% in 2003 did not result in an increase in revenue over the course of the business cycle. In 2000 receipts totaled $119 billion, which equals $143 million in 2007 dollars. In 2007, they totaled $122 billion. That's a 15% decline.

It wasn't the "greatest increase in revenue in American History!". It was a loss of revenue.

In constant 2005 dollars tax revenue went after the 2003 supply side tax cuts from 1.8 trillion to 2.414 trillion according to OMB
numbers
1,901.1 6,537
2004 16.1 1,949.5 6,642
2005 17.3 2,153.6 7,271
2006 18.2 2,324.1 7,773
2007 18.5 2,414.0 7,993
2008 17.5 2,288.5

And you can use your noggin and see why it's bumpkis. You know, the whole "time value of money thing".

Or your can resort to the original article I linked.

Or you can just recall the "economic boom" that was the Bush years.

Yes, I seem to recall Bush as being known a the President who presided over a booming economy.......

 

[Toro]

Really? Based on what?

By imbuing a deeply held belief in the American right that pretty much no matter what the rate of tax - any tax - it can be cut and pay for itself.

Most conservatives around the world don't believe this. But they do in America.

if you give money to a guy on welfare and to a venture capitalist which action is likely to increase tax revenue? Now you understand supply side economics.

^^^^^^^^^^^
This is what I mean.

 

[Brutus]

In constant 2005 dollars tax revenue went after the 2003 supply side tax cuts from 1.8 trillion to 2.414 trillion according to OMB
numbers
1,901.1 6,537
2004 16.1 1,949.5 6,642
2005 17.3 2,153.6 7,271
2006 18.2 2,324.1 7,773
2007 18.5 2,414.0 7,993
2008 17.5 2,288.5[/QUOTE]

And you can use your noggin and see why it's bumpkis. You know, the whole "time value of money thing".

You said it was a net loss in revenue while OMB said in constant dollars it went from 1.8 to $2.4 trillion!! Sorry.

 

[Toro]

But, let's just follow your logic out and ask the obvious: how did that work the last time we tried it?

of course as a liberal you will not be able to follow these arguments but lets try anyway.

1) it always works well, the larger the economy the larger the tax revenue.

2) the 2003 Supply side tax cuts produced the greatest increase in revenue in American History!

Once again, Brutus demonstrates how this is a religious belief amongst American conservatives, not an empirical one.

What you see is that there was a huge revenue increase during the Clinton years. There was also the much-touted revenue surge of the later Bush years, but this followed a spectacular revenue plunge earlier. At this point real revenue per capita is only slightly higher than it was at the end of the 1990s. That’s actually abnormal: given the long-term growth of the US economy, we should have expected a continuing upward trend in revenues per capita.

Taxes and revenues -- another history lesson - NYTimes.com

 

[elvis]

But, let's just follow your logic out and ask the obvious: how did that work the last time we tried it?

of course as a liberal you will not be able to follow these arguments but lets try anyway.

1) it always works well, the larger the economy the larger the tax revenue.

2) the 2003 Supply side tax cuts produced the greatest increase in revenue in American History!

Once again, Brutus demonstrates how this is a religious belief amongst American conservatives, not an empirical one.

What you see is that there was a huge revenue increase during the Clinton years. There was also the much-touted revenue surge of the later Bush years, but this followed a spectacular revenue plunge earlier. At this point real revenue per capita is only slightly higher than it was at the end of the 1990s. That’s actually abnormal: given the long-term growth of the US economy, we should have expected a continuing upward trend in revenues per capita.

Taxes and revenues -- another history lesson - NYTimes.com

how do we know the increase wouldn't have been greater without the tax increase?

 

[Brutus]

how do we know the increase wouldn't have been greater without the tax increase?

as long as you admit that 1.8 to 2.4 in constant 2005 dollars is a whopping increase we are making progress.

Is the liberal position, the more you tax away venture capital the more new ventures you'll have?

 

[Toro]

Please note the empirical evidence does not support the religious belief amongst American conservatives that cutting all taxes always causes an increase in revenues, so much so that Republican economists don't believe it.

http://www.usmessageboard.com/economy/144973-the-laffer-curve-bends-at-an-80-rate-of-income-tax.html
http://www.usmessageboard.com/economy/51527-tax-cuts-dont-pay-for-themselves-gop-economists.html
http://www.usmessageboard.com/econo...spending-to-blame-for-increased-deficits.html
http://www.usmessageboard.com/economy/143651-were-the-bush-tax-cuts-good-for-growth.html
http://www.usmessageboard.com/economy/139720-bush-tax-cut-extensions-will-increase-deficit.html
http://www.usmessageboard.com/economy/127139-republican-supply-siders-keynsians-in-drag.html
http://www.usmessageboard.com/econo...know-if-bush-tax-cuts-pay-for-themselves.html
http://www.usmessageboard.com/economy/91561-supply-side-economics-rip.html
http://www.usmessageboard.com/economy/51330-the-laffer-curve-is-wrong.html
http://www.usmessageboard.com/economy/51044-republican-supply-side-tax-folly.html

 

[elvis]

Please note the empirical evidence does not support the religious belief amongst American conservatives that cutting all taxes always causes an increase in revenues, so much so that Republican economists don't believe it.

http://www.usmessageboard.com/economy/144973-the-laffer-curve-bends-at-an-80-rate-of-income-tax.html
http://www.usmessageboard.com/economy/51527-tax-cuts-dont-pay-for-themselves-gop-economists.html
http://www.usmessageboard.com/econo...spending-to-blame-for-increased-deficits.html
http://www.usmessageboard.com/economy/143651-were-the-bush-tax-cuts-good-for-growth.html
http://www.usmessageboard.com/economy/139720-bush-tax-cut-extensions-will-increase-deficit.html
http://www.usmessageboard.com/economy/127139-republican-supply-siders-keynsians-in-drag.html
http://www.usmessageboard.com/econo...know-if-bush-tax-cuts-pay-for-themselves.html
http://www.usmessageboard.com/economy/91561-supply-side-economics-rip.html
http://www.usmessageboard.com/economy/51330-the-laffer-curve-is-wrong.html
http://www.usmessageboard.com/economy/51044-republican-supply-side-tax-folly.html

so the position you're refuting it that it ALWAYS increases revenue.

 

[elvis]

Somewhere in this debate lies the post ergo hoc propter hoc fallacy.

 

[Trajan]

Please note the empirical evidence does not support the religious belief amongst American conservatives that cutting all taxes always causes an increase in revenues, so much so that Republican economists don't believe it.

http://www.usmessageboard.com/economy/144973-the-laffer-curve-bends-at-an-80-rate-of-income-tax.html
http://www.usmessageboard.com/economy/51527-tax-cuts-dont-pay-for-themselves-gop-economists.html
http://www.usmessageboard.com/econo...spending-to-blame-for-increased-deficits.html
http://www.usmessageboard.com/economy/143651-were-the-bush-tax-cuts-good-for-growth.html
http://www.usmessageboard.com/economy/139720-bush-tax-cut-extensions-will-increase-deficit.html
http://www.usmessageboard.com/economy/127139-republican-supply-siders-keynsians-in-drag.html
http://www.usmessageboard.com/econo...know-if-bush-tax-cuts-pay-for-themselves.html
http://www.usmessageboard.com/economy/91561-supply-side-economics-rip.html
http://www.usmessageboard.com/economy/51330-the-laffer-curve-is-wrong.html
http://www.usmessageboard.com/economy/51044-republican-supply-side-tax-folly.html

so the position you're refuting it that it ALWAYS increases revenue.

If I may, no, we've had this out, there is I have been told NO evidence either way.....*shrugs*

 

[Brutus]

religious belief amongst American conservatives that cutting all taxes always causes an increase in revenues,

I'll pay you 10,000 if this is a religious belief among conservatives. Bet?

 

[Toro]

how do we know the increase wouldn't have been greater without the tax increase?

In one of those links I posted above, Greg Mankiw - who was Bush's chair of the Council of Economic Advisors - estimated through econometric modeling that for every $1 in income tax cuts, the federal government lost 83 cents in revenues.

It is important to note that conservative economists are generally correct about the efficacy of government in that the marginal rate of a unit of economic growth is affected by changes in tax rates, i.e. you get more GDP out of tax cuts (to a point). But the absolute levels of income tax cuts causes declines in revenues to the government than there otherwise would be. IOW, lower taxes and you get higher GDP but lower government revenues than otherwise there would have been.