Seymour Flops
Diamond Member
I'm no expert, but I understand the basics of Laffer's curve theory. If the government taxes income at 1%, it would generate much less revenue than the current rates. But if goes to 90%+ people lose their incentive to earn income and revenue drops, likey to much lower rates than if we kept our current rates. Therefore, if the idea is to generate as much revenue as possible, then governments should look for that sweet spot percentage that would do that.
I can see that working with a flat tax. Start with 20%, then lower or raise by 5% the next year and see what happens to revenue. But I don't think we would ever know given our incredibly complicates system of providing breaks to this group or that.
It isn't just the rich who get the breaks. The fact that lower income people pay a smaller percentage is a break for them, especially if they don't go over the income threshold to pay income taxes. But yes, the wealthy are the ones who can afford lobbyists to push for tax breaks, and tax attorneys to make sure they use all the breaks available.
If congress decided to raise the tax rates by 2% across the board, it would be impossible to determine the effect of that on revenue. Why? Because that bill/law would not be one sentence like "All existing tax rates will be increased by 1%, beginning January 1, 2024." No, it would be thousands of pages listing all the new breaks for some and penalties for others.
The ability to use the Laffer Curve effectively is one of many arguments in favor of a flat tax. I honestly don't understand why any well-meaning person would oppose it.
I can see that working with a flat tax. Start with 20%, then lower or raise by 5% the next year and see what happens to revenue. But I don't think we would ever know given our incredibly complicates system of providing breaks to this group or that.
It isn't just the rich who get the breaks. The fact that lower income people pay a smaller percentage is a break for them, especially if they don't go over the income threshold to pay income taxes. But yes, the wealthy are the ones who can afford lobbyists to push for tax breaks, and tax attorneys to make sure they use all the breaks available.
If congress decided to raise the tax rates by 2% across the board, it would be impossible to determine the effect of that on revenue. Why? Because that bill/law would not be one sentence like "All existing tax rates will be increased by 1%, beginning January 1, 2024." No, it would be thousands of pages listing all the new breaks for some and penalties for others.
The ability to use the Laffer Curve effectively is one of many arguments in favor of a flat tax. I honestly don't understand why any well-meaning person would oppose it.