A Quote by Arthur Laffer
The Laffer Curve illustrates the basic idea that changes in tax rates have two effects on tax revenues: the arithmetic effect and the economic effect.
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You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.
I used the so-called Laffer Curve all the time in my classes and with anyone else who would listen to me to illustrate the trade-off between tax rates and tax revenues.
Arthur Laffer's idea, that lowering taxes could increase revenues, was logically correct. If tax rates are high enough, then people will go to such lengths to avoid them that cutting taxes can increase revenues. What he was wrong about was in thinking that income tax rates were already so high in the 1970s that cutting them would raise revenues.
In addition to a soaring stock market, 6.6 million jobs have been created since tax relief measures went into effect in 2003. Our deficit situation has also improved as tax revenues have increased at double-digit rates over the past two years.
Well, I think the reality is that as you study - when President Kennedy cut marginal tax rates, when Ronald Reagan cut marginal tax rates, when President Bush imposed those tax cuts, they actually generated economic growth. They expanded the economy. They expand tax revenues.
Budget deficits are not caused by wild-eyed spenders, but by slow economic growth and periodic recessions. And any new recession would break all deficit records. In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the rates now.
The story of how the Laffer Curve got its name begins with a 1978 article by Jude Wanniski in 'The Public Interest' entitled, 'Taxes, Revenues, and the Laffer Curve.'
It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.
The Congressional Budget Office has been embarrassed repeatedly by making projections based on the assumption that tax revenues and tax rates move in the same direction.
A tax cut means higher family income and higher business profits and a balanced federal budget....As the national income grows, the federal government will ultimately end up with more revenues. Prosperity is the real way to balance our budget. By lowering tax rates, by increasing jobs and income, we can expand tax revenues and finally bring our budget into balance.
It isn't only rich countries that suffer from the effects of tax havens. Developing countries also lose billions of dollars in tax revenues due each year because wealthy individuals and some companies use tax havens to move assets and income offshore.
Conservatives in Government must make the case that lowering the tax burden boosts economic growth and leads to an increase in tax revenues.
I really like the idea of consumption tax, and most countries have a pretty serious consumption tax. It's called a value-added tax or a goods and services tax ... It's a sales tax. It doesn't tax labor, it doesn't tax savings or investment - it taxes consumption.
The Value-Added Tax, a sales tax that applies at every level of business transactions, is an easy tax for governments to collect, and a hard tax to evade. So it makes the job of raising revenue easier. The revenues from the VAT can then be used to lower taxes on income and saving and investment. The Value-Added tax doesn't penalize work or saving; it's a tax on buying stuff.
High tax rates distort economic decision making, and our corporate income tax rate is one of the highest in the world.
We need to lower tax rates for everybody, starting with the top corporate tax rate. We need to simplify the tax code. The ultimate answer, in my opinion, is the fair tax, which is a fair tax for everybody, because as long as we still have this messed-up tax code, the politicians are going to use it to reward winners and losers.
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