Posted on 07/08/2009 11:45:21 AM PDT by energylover
With the recent passing of Jack Kemp, I was reminded of his exceptional effort in leading the charge to supply side economics in the early 80's. The man behind the thinking was Arthur Laffer, a truly gifted economist.
Laffer's newest Book, The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen chronicles the power of less government and less taxes. Many argued that the deficits of the 80's was a function of supply side economics - that low taxes drove debt. But the reality is, as well told in the book, revenues increased under Laffer plan. Congress however did not spend less. Part of the spending issue was good, investing in defense to weaken Russia. Other parts were bad. Is was not until the Republican congress in the late 90's that spending was brought under control and in conjunction with lower taxes, much of the reason for the boom in that time frame.
Some parts of the Laffer story are well, laughable. In the simplest form, the Laffer curve says as taxes reach 100%, revenue drops off to zero - meaning, why would someone work if they were paying 75%, 85%, or 100% of their wages to the government? They wouldn't. But when Laffer and team asked the congressional budget office for revenue estimates for various increased taxes, the CBO increased total revenue forecast, a mathmatically correct but economically improbable outcome.
(Excerpt) Read more at 4yourcountry.org ...
Laffer PROVED that tax cuts increased revenues. Every single time!
The problem with supply side economics is that it works. When the tax rate is above the level of the optimum collections, cutting the rates increases revenue to the government, ie, it puts more money in the hands of the government, which will either waste it, or use it to abuse us. The good news is that the reason that the government gets more money is that the lower rates bring about economic growth, all other factors being equal.
Liberals actually do believe in supply side economics, they just don’t know it. If they didn’t, we would have a 100% tax rate.
“Liberals actually do believe in supply side economics, they just don’t know it. If they didn’t, we would have a 100% tax rate”
Absolutely.
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