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The fight between former President Obama and President Trump on claiming American economic prosperity has been heating up, but former Reagan economist Art Laffer declared the verdict is clear: President Trump caused the thriving Trump economy. “Trump has caused the Trump economy and deserves all the credit for it,” Laffer told FOX Business' Stuart Varney on Tuesday. “His policies are right on mark … and they really are his policies. President Trump understands the economy. Obama didn't.” Obama inherited an economy on the rocks after the market crashed in 2008, and, Laffer said, he was able to bring it back, albeit slowly. What Americans are seeing now in the Trump economy, he said, is a “continuation and a surge … that is second to none.” “President Obama is a fine man, but he’s not an economist,” Laffer said. Laffer said the seven-year-long recovery under Obama was the slowest in history and now Americans are flourishing in the boom Trump created thereafter. “This is the Goldilocks economy if I've ever seen one,” Laffer exclaimed. “And it's because President Trump understands economics … You get the growth of the U.S. staying at very high rates. You get tax revenues coming in nicely. You keep inflation under control. I mean, what's more to ask?”
Steve Forbes appeared on The WILS Morning Wake-Up with Dave Akerly radio show in Michigan:
☕ John Catsimatidis talked with Arthur Laffer this morning on his radio show, The Cats Roundtable.
☕ John Catsimatidis also spoke with Grover Norquist of Americans For Tax Reform.
☕ John Tamny has a new article up this morning as well.
☕ Reason, as might be expected, takes an unorthodox view of the new tax reform proposal from the Trump Administration. However, along the way there are some interesting facts and figures.
A growing economy will undercut the appeal of his ethno-nationalist politics.
Cato’s Edward’s notes that the U.S. corporate tax rates are in the “strong Laffer zone.” (The Laffer curve, named after Arthur Laffer, the economist who formulated it, shows that up to a point, tax cuts lead to an increase in revenues by fueling business expansion, broadening the tax base and attracting more foreign investments.) Studies examining OECD countries have shown that corporate tax rates above 26 percent reduce government revenues. The U.S. corporate tax rate is 14 percentage points above that rate, which is why America has a lot of room to cut. Indeed, corporate revenues from Canada’s 15 percent central corporate tax rate right now constitute 2.1 percent of the GDP (which is a bit higher than what it was when those rates were twice as high in the 1980s) and America’s 35 percent rate 1.7 percent of the GDP, estimates Edwards.
But Laffer refuses to ascribe his theory to one party, recounting a conversation with his neighbor Al Gore a few weeks ago in which the former Democratic presidential nominee told him the best bill he voted for in economics was the 1986 tax cuts.
Laffer underscored other notable Democrats, including Joe Biden, Harry Reid and Barbara Boxer, who also added their names to the 97-3 roll call, claiming they did it because it was “the right thing to do.”
Laffer joined The Heritage Foundation’s tax expert Steve Moore Monday to resell the pertinence of his Reagan-era tax cuts during a Heritage panel discussing the need for tax reform.
“We are at a stage in our history where we need a low-rate, broad-based, flat tax,” Laffer said, repeating the mantra throughout his talk.
He began with a cost-benefit analysis, pointing to John F. Kennedy’s tax cuts in the 1960s, where the highest marginal income taxes were dropped from 91 to 70 percent and the lowest from 20 to 14 percent.
Under these cuts, those in the highest tax bracket could now keep 30 cents of every dollar they made versus the 9 cents they were able to keep prior to the tax cuts. Similarly, those in the lowest tax bracket could now keep 86 cents of every dollar versus the previous 80 cents.
This cut, Laffer continued, reaped the greatest cost-benefit ratio for those in the highest tax bracket, giving them a steeper incentive to work because they were able to keep more of what they worked for.
“The reason you cut tax rates on highest group is not because you love rich people … it’s because you get more bang for the buck,” he said.