Dan Mitchell loves the Laffer Curve, and we love learning when and where he see the Laffer Curve doing its thing.
Journalists are especially susceptible to silly statements when writing about the real-world impact of tax policy.
They don’t realize (or prefer not to acknowledge) that changes in tax rates alter incentives to engage in productive behavior, and this leads to changes in taxable income. Which leads to changes in tax revenue, a relationship known as the Laffer Curve.
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But don’t hold your breath. We have an overseas example of the Laffer Curve, and one of the main lessons is that politicians are willing to sacrifice just about everything in the pursuit of power.
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P.S. I’m not quite as pessimistic about the future of tax policy in the United States. The success of the Reagan tax cuts is a very powerful example and American voters still have a bit of a libertarian streak. I’m not expecting big tax cuts, to be sure, but at least we’re fighting in the United States over how to cut taxes rather than how to raise them.
Larry Kudlow joined the Big John and Ray Show out of Chicago. They mostly talked about health insurance issues, important to hear from a supply-sider on this.