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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (746723)	8/3/2006 1:31:11 PM
From: TimF	Read Replies (1) \| Respond to of 769670

The Laffer curve IS mainstream economics. It doesn't say that any tax cut at any level will pay for itself. It says that maximum revenue is not optained at 100% tax rate. As you go down from 100% tax rate revenue increases. You can plot that increase as a curve, eventually the curve goes back down. The idea of a Laffer curve doesn't specify at what point revenue goes back down. The idea would be valid if the point was at a 2% tax rate or at a 98% rate. Also the Laffer curve doesn't assume any long term growth benefit from lower taxes. It only deals with short term revenue. Its quite likely that we are at a tax rate that is past the point where the Laffer curve turns down. In other words tax cuts decrease revenue in the short term. But even if this is true it doesn't mean that they do not increase revenue in the long term.