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Date: 2010-02-17 09:04 pm (UTC)
allen: extras (extras)
From: [personal profile] allen
You know, given the postscript summary at the bottom:

Tax rates fall leading to greater concentration of income at the high end, as tax cuts tend to be focused on the high income earners. While this doesn't lead to increased growth in the economy as a whole (and possibly leads to slower growth overall), it does increase the amount of income that is subject to taxes, leading to (in the long run) greater taxes being collected. Ironically, this policy of benefiting high income individuals also benefits the government, but not most of the population. Somehow this doesn't strike me as being the way Laffer tells it, but unlike with the supply-siders story, it does seem to fit the facts.

I'd be inclined to say that my original statement is correct: the Laffer curve is total BS. Given that the Laffer argument is that, by having lower marginal tax rates for high earners, you make the economy grow faster and thus make up for the lost revenue through growth. According to the numbers, that just doesn't happen. (Which isn't to say that there isn't a relationship between GDP, tax receipts, and marginal tax rates, just that it's not the one that Laffer proposed.)
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