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View Full Version : The Laffer Curve - Taxes


MACH1
04-08-2010, 05:22 PM
This helps explain why raising taxes isn't going to work, in fact it will be counter productive to do so. Keep in mind while watching this come Jan 1 we will be paying around 48% taxes.
This has three parts to it and your going to be really pissed by the end of them.

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fansince'76
04-08-2010, 05:28 PM
Two words: diminishing returns. It's very simple, really. The higher the rate of taxation, the less incentive there is to strive toward higher profits/income.

GoSlash27
04-08-2010, 08:43 PM
Problem with that is that while Ol' Art proved conclusively that the curve exists, he was never able to prove where we are at on the curve. Maybe we're in the diminishing returns portion and maybe we're not.

The problem isn't so much one of maximizing government revenue as it is one of minimizing wasteful government spending and harmful government regulations.

MACH1
04-08-2010, 10:03 PM
Problem with that is that while Ol' Art proved conclusively that the curve exists, he was never able to prove where we are at on the curve. Maybe we're in the diminishing returns portion and maybe we're not.

The problem isn't so much one of maximizing government revenue as it is one of minimizing wasteful government spending and harmful government regulations.

You've heard the term "can't get blood from a turnip" or "when you run out of other peoples money".

When people figure out they work Mon, Tue and Wed to pay taxes for that week, then why work at all. Go on the government gravy train which in turn worsens the problem and gives government that much more power over our lives.

GoSlash27
04-08-2010, 10:26 PM
Mach1,
No argument here. :drink:

Godfather
04-08-2010, 10:43 PM
Problem with that is that while Ol' Art proved conclusively that the curve exists, he was never able to prove where we are at on the curve. Maybe we're in the diminishing returns portion and maybe we're not.

The problem isn't so much one of maximizing government revenue as it is one of minimizing wasteful government spending and harmful government regulations.

That, plus the theory works better when you have a simple and straightforward economic system. We have an extremely complex tax code so it's not as simple as adjusting the rate. Then you take monetary policy into account--artificially low interest rates create a large amount of money looking for a place to land. That creates bubbles which generate short-term revenue from capital gains taxes but the bubbles always blow up in your face.

GoSlash27
04-08-2010, 10:51 PM
Godfather,
You're not suggesting that the Federal reserve system actually *creates* the boom/ bust cycles they were intended to protect against, are you? :chuckle: