I agree but it doesn't really need to be optimum all the time.
The hard part is that Republicans won't admit that sometimes raising taxes is a good thing. When the economy is going nuts, raise taxes...not a lot, but enough to slow it down and increase revenues like the dickens. When the economy starts to slow, lower taxes. Depending on how fast you can respond to the economic news, it could be a controlling function.
Of course, Greenspan figured out that interest rates ARE a controlling function if used properly. I am gonna miss that man.
It can't be optimum all the time because it is constantly moving.
The problem is that political power with high tax receipts is like an alcoholic inheriting a liquor store. If the money was used to pay a deficit great, but in reality it is seen as an opportunity to spend, spend, spend.
"I agree but it doesn't really need to be optimum all the time. "
Excellent point! This is often overlooked.
Analagously, I don't need to optimize my income (hours worked vs. money earned). If I make enough to live well and save for my retirement and I'm happy with what I have, I shouldn't need to work more hours or push for a raise, should I? Similarly, if the government has enough to operate on, it shouldn't always be looking for the next buck.
How does a sales tax (or VAT, whatever it is called in its discussion mode carnation here) figure in---in lieu of income tax or in addition to very very modest income tax rates?
Doesn't that seem to be about the only way to "raise" taxes when the economy is good and "automatically" "lower" taxes when the economy starts slowing?
Does Laffer address this type of tax? I don't know much about tax policy, but it seems like this is a way to build the Laffer curve into tax policy.
"When the economy is going nuts, raise taxes...not a lot, but enough to slow it down and increase revenues like the dickens"
Eliminate ll the illegal and unconstitutional social services, SS, Medicare/medicade, food stamps, hud, etc., the government needs less money not more.
Gonna have to disagree with you here.
When the economy is going nuts, raise taxes...not a lot, but enough to slow it down and increase revenues like the dickens. When the economy starts to slow, lower taxes.
People make long term business and investment decisions based on current tax rates. Raising taxes just because the economy is doing well can ruin those plans. And who decides what taxes to raise and by how much? By the time Congress got its head out of its butt the economy will have slowed on its own. That's why it's better to raise or lower interest rates. The Fed can act very quickly.