Monday, June 20, 2011

The Laffer Curve Is Real …

June 17, 2011
You can argue about the exact shape and slope of the Laffer curve, you can debate the possible lack of symmetry on it, you can even question exactly where on the curve we sit at any given moment.  But I fail to see how an educated and even remotely sane person can debate the Laffer Curve’s existence.
Three Questions:
  1. When we raise income taxes on the so-called “rich,” is the goal to punish the wealthy? Or to raise more revenue? If the goal is the former, go nuts raise tax rates to super high levels. If the goal is to raise more revenue, you likely need to ease back on the throttle.
  2. When we discuss “raising taxes,” do we mean raising the nominal income tax rates for the various brackets? Or do we mean increasing revenue, actual tax receipts? They are often not the same thing.
  3. Do incentives matter? (hint: they absolutely do)

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