As a state legislator, I receive a weekly supply of laissez-faire doctrine from the Connecticut Business & Industry Association and Yankee Institute. The breakthrough moment, at least according to legend, came when Laffer scrawled a curve on a cocktail napkin for Dick Cheney. On the contrary, economists from Adam Smith to Karl Marx have known that all value in an economy is created by labour. They might as well be denying the sky is blue, or the sun is bright. Adjusting income tax rates does not completely remediate the problem. Show your love for great stories and outstanding journalism. This flawed ideology, touted by Arthur Laffer in his book “The Laffer Curve,” rests on theories that don’t stand up to any level of scrutiny. Like many things the Democrats say, it makes their audience dumber for believing it. I have painted this old cider mill and farm over many years and felt it was a part of Connecticut’s history. How important of an issue is the COVID-19 pandemic in the upcoming election? Website by Web Publisher PRO, CTViewpoints welcomes rebuttal or opposing views to this and all its commentaries. This is because nobody else in the world is likely to pick up the tab for the inevitable reduction in living standards that otherwise follows. The Laffer Curve is the most famous, non-empirical economic concept of the last fifty years. As we attack each other and disparage the good name of good people many times by members of their own party our politics have evolved into a free-for-all, full contact event that spares no one. There will be no surge in support for the current government based on lower taxes for the rich (sometimes called "flatter" or even "fairer" taxes by the wilder Reaganites). Legislators and the voting public have consistently been persuaded by a false premise that if we reduce our tax rates on the wealthy and large corporations, our economy will improve. So while it's just not as simple as the 2 dimensional plot, no rational economists or educated person would deny that there are consequences for raising taxes beyond some point. Here is my homage to Fisher -Price, Yellow […]. One prominent supporter of low taxes was Tunisian Scholar Ibn Khaldun (14th century), who explained that lowering taxes stimulated business activity, and that raised tax income. It seems unlikely that even the US government will be able to repeat that trick now, let alone the British one. But that is not to say tax cuts won't happen. The Laffer Curve got its name back in 1974 when the American economist Arthur Laffer was discussing tax policy with Dick Cheney and Donald Rumsfeld (during the Nixon-Ford Administration). Sometimes, people will just start giving up (for personal or moral reasons), or just retire early, even when the tax rate hasn't changed. Ultimately, the longer term issue is this: The wealthy can hire lobbyists, funnel money to fund supply-side doctrine in our higher education system, and claim complete control of the political system by expending limitless dark money. So taxes were cut for higher earners while workers paid more. Phone: 860-218-6380, © Copyright 2020, The Connecticut News Project. Basically, she was explaining why Communists States that provided so many social benefits, collapsed under their own weight: and her answer was that you get what you incentivized, and communism incentivized sloth and corruption. We are exactly where our grandparents were before the Great Depression. Laffer was an associate of the Reagan administration, which had a staged cut in the marginal higher rate of personal income tax from 70% to 28%. (Similar ideas as laffer). There are two places where this money could go: back into the business or the hands of employees. They often bring up stuff like Reaganomics (he cut the tax rate, and increased revenues) as an example, but I'm not exactly sure why, because facts are on his side: the tax cuts resulted in more revenue by the end of his term, than he started with: proving the theory of Laffer correct. These income earners are unlikely to take a dollar over that $5 million, but the excess money doesn’t simply evaporate – it came to them through profits the business.