What’s your take on the Laffer Curve? As I recall, if you reduce taxes, that boosts the economy so much that actual tax revenue increases. Therefore, if you reduce taxes to zero, the gummint will be rolling in it
As with many mathematical models intended to predict something in real life, the model occasionally predicts impossible results. It is also possible that the curve you are refering to has a maximum hump based upon other economic factors.
You know, doing what is right is easy. The problem is knowing what is right.
–Lyndon B. Johnson
The Laffer Curve is a fig-leaf used to conceal the fact that if you reduce taxes (to get Republican votes) and increase government spending (to get Democrat votes)you will go further into debt (and Ross Perot got all the votes of people who cared about that).
Does the phrase “voodoo economics” ring any bells?
Interestingly, depending on where we were on the Laffer curve, increasing taxes would have increased government revenues. I don’t recall anyone ever noticing this. Perhaps our taxes were just too low.
Tell you what, Chuck: Why don’t you call the IRS and beg them to give you a huge fine, then tell us if you see an increase in community services ;).
“I had a feeling that in Hell there would be mushrooms.” -The Secret of Monkey Island
Well, I think this should probably be in MPSIMS, considering the wording of the question (“What’s your take…?”) but anyway, it’s a simple max/min problem. It looks like an upside down parabola. There is a point on it where taxes are as low as they can go to obtain maximum revenue and there are two points where revenue is the same with gretaly different taxes. however, as with all simple mathematical functions, it does not take into acount the millions of variables invlved in econimics.
“C’mon, it’s not even tomorrow yet…” - Rupert
If you need a graphic solution, http:\ alk.to\Piglet
BigRory has the answer I kinda wanted. Some point on the curve has maximum revenue. And, as he says, there are many other factors. The time factor, especially: what brings in the max revenues this year may not be the best way to go for future prosperity.
Is not economics full of voodoo?