The Consequences of Taxes with Dr. Art Laffer

According to Dr. Arthur Laffer, since 1913, when the United States first imposed the income tax via constitutional amendment, the top rate of that tax has determined the fate of the American economy. When the top rate has been high, as in the late 1910s, the 1930s, 1940s, 1950s, and 1970s, the response of those with money and capital has been to curtail real economic activity in favor of protecting assets and income streams. Huge declines have come to the economy in these circumstances.

On today’s podcast, ARK CEO, CIO and Founder Cathie Wood is again joined by Dr. Arthur Laffer, a famed economist, well-known for his creation of “The Laffer Curve,” so Dr. Laffer and Cathie can discuss Laffer’s book, Taxes Have Consequences, in which Dr. Laffer provides a history of taxes and their impact on the United States economy. Dr. Laffer explains why he believes that a low rate broad-based flat tax, spending restraint, sound money, minimal regulations, and free trade are the answers to most of our economic problems.

Key Points From This Episode:

- An overview of Arthur Laffer’s new book, Taxes Have Consequences.
- How the government finances taxation.
- A history of income tax since 1913.
- Defining characteristics of the Roaring Twenties.
- The market collapse that occurred in 1929.
- Similarities between the environment in 1929 and today.
- How Art would structure the American tax system if he could.
- Why stimulus spending hurts the economy.
- Art’s thoughts on regulation.
- Why Art is a strong proponent of developing free trade agreements with countries that the US currently has issues with.
- What makes America different from the rest of the world.
- The correlation between tax hikes and economic performance.
- Why everyone benefits in a low rate broad-based flat tax system.
- The role of taxes in the Great Depression.
- Factors that Art attributes the high inflation levels to.
- The importance of acting fast when it comes to changing policies around taxes.
- How the pandemic has accelerated the migration to low tax states.
- Interesting statistics about states like Texas, Florida and Tennessee.
- Art’s thoughts on how to address poverty in the United States.


For more updates, follow us on:

[keefermallory]

Is Arthur Laffer the founder of the Laffer Curve I've seen in my Economics textbook? Yep. Just heard it confirmed at 15:42. Nice!

[bpo]

One of my favorite guys. Fantastic book

[MikeCasey]

The minimum wage was well intended, but its result is that the unskilled are kept from apprenticeship jobs which will grow into well paying jobs.
I can’t legally hire an apprentice (who doesn’t know a wrench from a screwdriver) for $5/hour, but I can charge him $20, 000 to attend my trade school.
The Medical and Legal professions have got around this by hiring unpaid interns.

[millergre]

The reason we don't have a flat tax is the same as why we have fiat and not bitcoin - corruption.

[mrsterling]

Starting at 30:30 mega important lower your taxes, move to Tennessee!!!

[millergre]

How do you deal with racial injustice? The same way you deal with any injustice - by being just. Social justice is not justice - justice does not need a modifier. Modified justice is unjust and the result is all the problems Dr. Laffer pointed out. Why? Because short cuts result in short cummings. Quick fixes lead to quick demise.

[GOOGLEMECHUK]

Although I believe that the "trickle down" (i.e. human capital production) vs the "trickle up" (i.e. rent seeking costs) is inconclusive and worthy of solving, I really like Art Laffer's proposal to set an indirect tax rate (VAT) equal to a direct tax rate (income tax).

depending on the "trickle down" vs "trickle up", the standard deduction on income can range from 0 (if trickle down) to gdp/capita (if trickle up), and the tax rate can then be between 10% (with 0 standard deduction) and 20% (with gdp/capita deduction).

I lean more towards 20% VAT and 20% income tax rate above gdp/capita (on realized gains only), but a flat rate of 10% income (realized & unrealized gains) and 10% VAT, is a hell of a lot better than what we have now

[Izma]

This was fun to watch. Such a candid and loving relationship between mentor and mentoree ❤

[malekhakim]

Where are the comments? Are they being deleted?

[surefire]

Laffer should have also explain the final result of the Reagan Tax Cuts (to implement Laffer hypothesis) and The Supply Side economy ( Spend more than what government collect). Reagan implemented the Laffer+The Supply Side and produce the final VOODOO economy which both parties love and 80% US citizens have already implemented at home and are living with it.

[johnreitzel]

HI ART JUST SAW YOU ON KUDLOW. I REMEMBER THE KISSINGER A ND NIXON VISITS TO CHINA. WE WERE ALL EXCITED. THANK YOU AND ALL. ALSO GREAT OVERVIEW ON KUDLOW.
GOD BLESS

[cwnicholson]

A rising tide lifts all boats ⛵️🛶🚤🛳⛴️🛥🚢

[upnorthyooper]

I would vote for Art, but there is no way they would let that much common sense into office.

[Urlocallordandsavior]

Worst case scenario, I'll probably leave California for a state like North Carolina (it's much closer to the historical sites too, there's hardly anything here). I just don't see Republican states falling the same fate as Europe or Detroit/San Francisco, the good thing about our decentralized federal government and the size of our country. Kind of worried about my fellow Gen Zers though (I used to be on the left), hopefully they and Millennials grow out of their leftist phase.

[patrickmchargue]

All these great ideas would decrease the control that government exerts over people's lives - which means (for them) it's a no-go.

[jlgpianokeys]

Well FDR really didn’t help future generations when he is the reason behind social security. Not a good set up for growth when it’s taken out of everyone’s income and the age to start drawing from that portion of income keeps increasing to the point that people never see that money. So sad.

[marcsimmonds]

Total BS. Look around you at all of the economies that function just fine with proper tax system.

[billhollis]

Politicians only care about themselves, no one else. OK there may be a few exceptions.

[rajaradhakrisnan]

Wow saying black ppl are aggressive was not called for

[omnipotentwiz]

The rich is not the problem. They are the answer. You’ll benefit more from making poor people rich than trying to pull the rich down. If you live in the West, the rich is not the cause of your problems. Your ignorance and financial illiteracy is.