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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: JohnM who wrote (127072)	7/23/2005 9:40:05 PM
From: Ilaine	Read Replies (1) \| Respond to of 793711

"Cutting taxes on the middle class" etc. is a political argument. The Laffer curve is an economic argument, not a political argument. It's actually a very simple argument, grossly oversimplified in order to make it comprehensible to politicians and voters because they're the ones who make policy. Economics do get politicized, don't get me wrong. The concepts that were digested into the Laffer curve are a couple of hundred years old, but Laffer got his idea for the simplified curve after the results of the Kennedy-Johnson tax cuts were digested. It's a back-of-the-envelope explanation, and, in fact, Laffer first drew his famous curve on a napkin. It works the same no matter which party is in power. Here's an article on the concept put out by the Atlanta Federal Reserve Bank in 2000. frbatlanta.org BTW, the argument that tax cuts always increase revenue which always more than makes up for the tax cuts is a mis-statement of Laffer's argument, made for political reasons. If, for example, taxes were cut to zero, then there would be no increase in tax revenue, by definition. On the other hand, raising taxes to 100% would be a very stupid idea. Somewhere in the middle is where you want to be.