Laughing at the Laffer Curve: The Trump Tax Reform Con

Robert Wenzel
Editor & Publisher

[floridaboy]

2. Uber Driver scenario.
If you know that you're getting taxed at a higher amount which feels like punishment for making more often times you'll try to make just below the amount you know you'll avoid higher taxes.
People need incentive.
I remember my first year breaking 6 figures I contemplated staying under 91k to avoid the higher taxes as when you combine state, federal, and local taxes it's not really that much more so why work extra...
I can relax and avoid the extra cash but I am paid in having more time.
So yes the driver would stop driving as hard as many Uber drivers made up 90k in San Fransisco just 2-3 years ago before Uber changed it's rates due to too many drivers on the system.

[Linkona]

In sweden we did just this a few years ago. We did cut in taxes making everyone earning more if they worked. And the result was 10% more income to state by taxes.

[floridaboy]

This guy should never be allowed to talk economics ever again!

[saraolivia]

If you get to keep less of your money for working the same hours. Why would you work more when you can work less and make the same money. I'd find an easier job where I'm less productive. This is a recipe for wage decline. I know personally union worker get paid less to work the same job as non union. When ever the union comes in to negotiate higher wages the non union workers get one too. Why? Because nonunion workers are more productive and worth keeping otherwise why give them higher wages to keep them? If I get paid the same as a union worker and work harder why not just join the union and be just as unproductive. People change jobs and jobs don't always replace you if you leave. In fact many cases they make it where you want to leave and go elsewhere and never fill that position and restructure their labor costs.

[kessy]

Deficits are caused by government spending on social Welfare programs and Entitlements NOT Tax Cuts. Its government spending that is the problem not low taxes.

[maxkaspersson]

The concept of the laffer curve isn't wrong because it is hard to determine where the optimal point is. I live in Sweden, and it's easy to correlate lower tax income for the state to when our tax pressure goes up, usually happens when our socialist wing is in power, I can't say where the optimal point is, but I can say that we are on the "too high tax" side of the curve.

[GeorgWilde]

The point of optimality is when government has zero revenue and zero spending.

[jawhitak]

He lost all credibility when he said trickle down economics. Any true Economist knows there is no such thing. This guy's the husler this guy's full of shit...

[roypiper]

Believe it or not, the trump INDIVIDUAL tax cuts have raised revenue. But... the business cut has lowered it. Which tells me the apex of the Laffer Curve is somewhere between 21% (the business rate) and 37%. (the new marginal max rate.) Totally agree that cutting government spending would help even more.

[netotapo]

you do not understand the laffer curve

[gmanchannel]

Hi sir if you want to look at the tax effect on economy you cannot just look at just the government you will also need to look at the investment and the consumer. And the import export of the country. Basically lowering taxes makes the market more liquid and and stimulate growth for both consumer and investors. Your assumption would be accurate if the GDP is at its maximum ceiling and will not increase anymore for USA, as an outsider i think USA has much more room to grow. Tax cuts will help smaller business Grow.

[garyb]

Low taxes work. a great example is Ireland. 40 Years ago it was a very poor Country, they have had very low corporation tax for years and now it is one of the richest Countries in the World and they have never collected so much tax. Its common sense really.

[rogerify]

What are you saying? That a 10% tax cut is no good for blue collar people, and we should just not care and give the money to the Govt. In tax form... you must be crazy, last time I check there are secondary and third order affects by doing a tax cut. For example, our economy is consumer based, so theoretically a 10% tax cut to our society will just move moneys for government to collect tax in other ways like consumer sales tax. In addition, more money as small as it may be it, incentivizes consumers and gives them disposable income to push into the economy.

[Illumination]

When the wife leaves her job some person, who wasn't paying taxes before, will pick-up the job and be paying taxes...the job doesn't go away.

[Ingodwetrust]

In the example of the wife quitting her job because her husband is keeping more of his income vis a tax cut...
the labor market is also a _market_ and so is subject to a supply and demand curve.
i.e. the supply of workers is down one, but the demand for workers is still the same. eg. the wife still is consuming the same amount of food, gas driving the kids to school, ect; and all the associated labor that goes along with providing those things.
therefore in your example the effect would be to raise average wages.
More money in the pockets of Americans, and less for the gov. to spend blowing up people in the mid-east and all the other disgusting ways they use our taxes? Sounds good to me. 
In fact if cutting taxes actually gives the government more revenue that's an unfortunate side effect, far as I'm concerned.

[floridaboy]

1. The mother leaving the workforce is an edge case scenario.
- You're also forgetting the people that are now interested in chasing larger salaries as they have larger incentives.
People get the taste of success and want more.
Also people who have more money would consider the extra money that they get to keep play money or investment money.
They will either invest in themselves by buying something which is great or they will invest it to try to make a return which is also great because that allows companies to grow and hire more people.
A person might even save their money to create their own business to attempt to chase the American dream.
So many people are so caught up in trying to maximize the tax revenue that they forget this is other people's money that they worked for. You don't have a right to it.

[FraterOculus]

Thomas Sowell disagrees, because corporations pay what they can afford to pay, and if it's not convenient, they aren't paying.

[garygogo]

You are using a few individual anecdotes to say that the laffer curve isnt valid. You are missing the whole point of the laffer curve. Its for the economy in a whole. When taxes go down you are more likely to have businesses starting, businesses moving here, businesses returning here, and more productivity in a whole, which will generate more taxes in a whole. Lets keep it simple, what would generate more tax revenue? 10, 000, 000 people making $50, 000 a year in the work force being taxed at 50% or 20, 000, 000 people making $50, 000 in the work force being taxed at 30%.

[saraolivia]

So if I was a business that manufacturer goods and create jobs. If I'm taxed 52% I 1. Need to cut labor to keep my revenue and head above water or 2. I just more it all oversees. That creates lost jobs and added decreases in tax revenue.

[glacial]

Oh sure. Let's totally forget about history and how it's already proved this.