I read your whole post the first time. So economists who disagree with Laffer are dishonest? Isn't there room for disagreement between them? Didn't we artificially stimulate the economy during the early 80s by huge deficit spending, which we are still having to deal with today? If Clinton had nothing to do with the economy during his years in office, then was the recession during bush #1's reign Reagan's fault?
I still say that we can't use the Russian economy to make easy comparisons with the effect of tax policies on the US, because it is so tremendously different. The economy of the world is not so simple that anyone can predict the effect of specific policies in all situations. Raising taxes is not always bad and cutting taxes is not always good. And I gave a specific example of that.
It's pretty obvious - there are huge opportunities and huge problems in a developing economy, just like in China, India, Russia, and any number of other countries. Just because they changed their tax policy, and their incredibly moribund economy made some improvement, and their tax revenues went up, just because they finally have a tax rate that people can afford, doesn't necessarily correlate with the fact that the new tax policy is the key to their improvements.
It's just way too simplistic. Maybe the tax policy is a key reason why things got better, but maybe its not. How do you know that the military spending on Chechyna (is that how you spell it?) made the difference via artificial stimulation. Maybe the govt. report on actual tax revenue is different because not as much is being stolen before. Maybe the huge foreign investments give more people income that they can't hide from tax assessors.
Maybe it's because Steve Forbes paid the tax bill himself. I tend to distrust people who suggest big changes in tax laws if they would stand to benefit tremendously. I think I'd probably do better in a flat tax world personally, or at least not be worse. But I don't think it would be good generally. But that is not my reason for not being able to ignore such a gross generalization.
You just can't say why it happened, not without a huge amount of study. Just because event 'A' happens, and event 'B' seemed to precede it, does not mean that A leads to B.
Did the world trade center get attacked because Bush was president? I doubt it.
One event preceded another, but its hard to say if they are connected or not. Lot's of other long term things are going on in Russia that should help the economy, including more openness in business, more freedom for individuals, the establishment of courts of law instead of personal fiat. I actually thing its a good thing for Russia to have realistic taxes that those people can afford to pay, instead of such huge taxes that everyone must cheat to survive.
-nick |
