The economist advising both Senators Warren and Sanders about their tax plans has a strong idea on where the optimal tax rate should be for the rich. Art Laffer of Laffer Associates joins "Squawk Box" to discuss.
Two points. First when it comes to where the rate should be we have an interesting reference point. No matter what situation we were in (war, depression, prosperity, etc.) or what the tax codes were federal revenue has NEVER exceeded 19% of GDP and has never been lower than 15% of GDP since the start of 20th century. Therefore, if you want to grow federal revenue you grow the economy. The government has never grown the economy through high taxes. There is pattern of lowering taxes stimulating growth, though.
Secondly, their insistence we raise taxes to pay for things ASSUMES the government is the best entity to fix those problems. Many of us who oppose tax hikes and growth of government do so because we honestly believe government is NOT the best entity to fix those problems. There are examples in history of where the government trying to fix something made things worse than if they hadn't acted at all. As well as examples of government inaction that led to a historically fast recovery.
darthhodges
The question should not be "How much can the government tax before it becomes detrimental?" The question should "How much is the minimum amount of tax revenue the government needs to cover necessary spending?"
lakeguy
What none of the punditry seem to understand is that bureaucratic government is the absolute worst manager of any source of revenue. It takes decades for even a local government to repair a road, yet private companies build massive toll roads for hundreds of miles in no time. If you gave government 100% of revenue, there would still be "poor" people. Ever heard of Soviet Russia or modern China? I've seen people in Beijing who were far poorer than villagers in Bangladesh. Taxes should be paid yes but they will not end poverty.
jeffcokenour
face it -we cannot spend our way to prosperity, especially when a highly inefficient bureaucratic government will spend $2 dollars for each $1 dollar they distribute to specific groups just to stay in power. The other issue is that the government focuses on confiscating money for optics rather than on job growth.
stevenrozeveld
The smuggest part of the interview is at about 6:35. You don't need me to explain it....just watch.
spazbates
The very first words out of the host's mouth contain a false premise. He stated that the rich "aren't doing anything productive" with their money. As a matter of fact, no billionaire is stuffing his money in a mattress. Their money is in investments: in stocks to fund the growth of private business, in bonds to finance debt for various projects including municipals, in newspapers and charitable foundations. Sure, they've got sports teams too, and society has indicated quite clearly that they want that. But the idea that the government could actually use that money more productively than the people who earned it is a fantasy disproved by hundreds of years of experience to the contrary. It is simply the politics of envy and excuses for confiscation.
ep
instead of stealing a fish from a rich man why not just give out fishing poles?
makeitpay
Lot a people at CNBC just can't learn the lessons of the past.
MichaelWilliams-phri
Cut spending and tax rates won't matter nearly as much as they do because of yearly deficit spending.
lakeguy
The problem isn't how to tax the rich or the working class. The problem is state and federal spending, That's the problem. People who have no idea running a state or a country that has never even ran a simple business. In CA we went from the end of 22 with a hundred billion surplus to 2 months into 23 with a 25 billion deficit. Did the roads get better? NO we got more "government" up our butts more crime, more homeless, and more welfare. These text book geniuses and common sense idiot running not only the state but the federal government are crooks. Where else can you become a congressman or senator on 175-200K a year and in the length of 4-6 years become a millionaire? The person making the same money don't become millionaires in the same time frame. The government are filled with crooks. Rules for us but not for them. We've seen this time after time. Then we have interviewers that ask some of the stupidest questions. If we could hear Arts thought? I think it would be hilarious.
Youcomeasuare
Does this guy thinks we’re idiots. How is he taken seriously. He used 1929 as an example. You know what else happened in 1929? Jeez.
timmurphy
Always wanting other people's money.
Gawd forbid we talk about the insane amount of money our government spends/wastes ($6.5 trillion- 2024) and only bringing in $4.6 trillion.
Rambleon
"The best you can do for the economics is to reduce taxes for billionaires. And if you have any doubts - ask a billionare!" Jonathan Pie
noldo
Confíscate money that is not yours?
The notion that we can simply take away money from a person or group of people who earn large amounts has no valid consciousness. These people are not out there telling you that you can’t earn as much as them. We live in a capitalist society, I’m pretty sure that’s what the founding fathers intended, not theft. What law prohibits you from earning as much as your next door neighbor? Through the history of economics we have seen the virtues of productivity specially when aligned with job market creators. I think Dr. Laffer is on a right track, or at least has a more feasible proposition than to create disproportionate tax disparities / or stealing money.
LB-dmzy
Art Laffer : The guy who said a recession wasn't going to happen in 2008. I guess CNBC thinks Americans have a short memory.
Tinman
This discussion is framed in a wrong way. It has never been about punctuating the of notion success. Think about it, money management firms constantly help the rich to get richer. Billionaire philanthropists work hard to open our borders. Every time banks run into trouble it's always the hard tax paying citizen that bails them out.
It's not about stopping rich peoples shopping habits, it's about making them take responsibility for what is best for the society as such.
rudolfbaresic
To sum up this video, he's saying "The best way to tax the rich is to give them a huge pay cut overtime."
jonathansaavedra
The step up basis is to treat cash and property other than cash equally.
jwacio
Thats why the only way to deal with this problem is to raise capital gains taxes to 70%. If you want passive income youre going to pay for it. No one can escape it.
nwbw
Trying to imagine the review of Laffer’s book by that economic heathen at the NYT.
