The Laffer Curve and the limits of the state

The Cobden Centre ^ | May 27, 2011 | John Phelan

[all the best]

“I’m mortified to have to pay 50%!” So said the phenomenally successful singer Adele in an interview with Q magazine. And why shouldn’t she be? Isn’t it unfair that a person can perform labour for which they get less of the reward than someone else who didn’t perform it? The right to work as you wish and dispose of the fruits of your labour as you wish are essential rights that differentiate free men and women from slaves. Agreeing with Adele seems a moral slam dunk.

Not if you write for or read the Guardian. They took Adele to task for criticising government spending on transport and schools elsewhere in her interview, remarks which are easily dealt with. But their rebuttal of Adele’s complaint about the 50% tax rate was bizarre; the Guardian simply said “The Beatles had to pay 95%”

This is true historically but the obvious response would be ‘So what?’ It’s worth remembering that the period when these penally high tax rates were in place wasn’t exactly a golden one for British economic policy making with the ‘stop – go’ spasms and sterling crises of the 1960’s giving way to the rampant inflation and economic mayhem of the 1970’s. High taxes are no better an idea now than they were then.

The reason high taxes were and remain the wrong policy prescription is a very obvious one; the more you tax something the less of that something there is. That is why governments pile taxes on cigarettes and alcohol, (they claim) they want there to be less smoking and drinking.

The problem the left had when it imposed high taxes before, and has now that it would do so again, is that while it accepts that this obvious and empirically proven proposition applies to fags or booze...

[all the best]

Good piece on the effects of high taxes from a British think tank.

[Brilliant]

If you want to know what the limits of the State are, look at North Korea.

[gibsosa]

Typical comments at the site from the entitlement generation.. jealousy.

[null and void]

If you want to know what the limits of the State are, look at North Korea.

Or send your daughter through a TSA grope-fest.

[seowulf]

A tax on fags...now there's a thought.

Higher fag tax, fewer fags.

[VRW Conspirator]

A tax on fags...now there's a thought.

LOL I stated here that if taxing an activity reuces such activity, then we need to tax liberalism to death.

[doc11355]

... the statists’ opposition to this economic truism [Laffer Curve] has often been simply hysterical, even from noted economists. This is because they understand the implications of the Laffer Curve. It sets a cap ... beyond which the state’s share of the economy cannot advance. At some point taxes will rise so high that ... the limits of statism are reached.

This, of course, can be represented by Hauser's Law:

[Kellis91789]

Well, obviously government employees must believe high taxes are worth the services they provide, right ? So they should fully support a 100% tax on any government wage or pension amount that exceeds comparable private sector wage and pensions, right ?