A tariff “for revenue” was one where a rate was set low enough for the good in question to flow into the country in sufficient quantity to bring in increasing receipts to the government. A “prohibitive” tariff was one that was so high, receipts would go up if a rate were lowered. The “Laffer curve” concept was the most discussed theorem in political-economic debates in the United States in the 19th century.
Yesterday on NPR’s Marketplace, Leftist host Kai Ryssdal tried his best to interview (more like trap and trick) House Ways and Means Chairman Kevin Brady. The interview is not too long, and a transcript can be found here if you prefer to read it.
De-funding government-funded radio like NPR should also be a part of the the tax reform bill, maybe we can get that next time.
On Thursday, the Joint Committee on Taxation confirmed that the Senate tax cut bill will boost economic growth and create jobs. Yet Republicans started freaking out that the bill might produce a slight increase in deficits over the next decade.
Every independent analysis of the Senate bill now confirms that it is a pro-growth bill. The only question now is how much growth will it produce. The JCT report says that the Senate plan will increase GDP by an average 0.8% over the next decade, and increase the number of jobs by 0.6%. Those might seem like small numbers, but they represent more than $100 billion in additional economic output and a million new jobs.
Given the incredibly sluggish pace of economic growth since the recession ended, you’d think boosting annual growth would be the paramount concern.
The tax reform bill now pending in Congress will be very pro-growth, like President John F. Kennedy’s tax cuts passed in the early 1960s, and the tax cuts and reform that President Ronald Reagan led in the 1980s. All of America will benefit from that soaring growth, and the long overdue end of long-term stagnation, where America has been stuck for a decade now.
Presidents Kennedy and Reagan fundamentally fixed the individual, worker side of the tax code, as Lawrence Kudlow and Brian Domitrovic explain in their recent book, “President Reagan and the Reagan Revolution: The Untold Story of American Prosperity.” When Kennedy entered office, the top income tax rate was 91 percent. He reduced that to 70 percent, and then reduced all the other tax rates by an equivalent percentage — roughly 23 percent — as well.
But that did not result in a 23 percent reduction in income tax revenues, which would have been the static estimate not considering resulting economic growth effects. Instead, revenues rose as the economy boomed for the rest of the 1960s, until Nixon’s tax increases and monetary policy chaos (cutting the dollar’s tie to gold) cut the boom short.
RadioWest, a program on Salt Lake City’s local NPR affiliate, decided to have a tax reform discussion of sorts. This would have made for a nice debate, but instead there are two interviews. The first is with Leftist Jeffrey Sachs, the other is with our friend Brian Domitrovic. Listen to the podcast here. (Sachs is allowed to speak into the 35th minute; Domitrovic segment begins at about 36:45)
It is not totally clear when this interview was recorded, but John Batchelor was able to talk extensively with Larry Kudlow and Brian Domitrovic about their book, JFK and the Reagan Revolution. Their book was released in the fall of 2016, and so if this interview was recorded a year ago at around this time, that would make sense. Anyway, it is a very good, extensive discussion.
Obama’s higher taxes will continue so tax reform is needed now
The Obama economy was stuck in the 2 percent growth range for most of his presidency, and many economists say it will likely remain in that range — even though Mr. Trump has promised that his policies will boost growth to 3 percent.
That’s not much to write home about. Shortly after the 1981-82 recession, the Reagan economy was soaring by 5.6 percent and 7.7 percent respectively in the third and fourth quarters of 1983, as a result of his across-the-board tax cuts.
By 1984, GDP was growing by 7.3 percent and Mr. Reagan won re-election in a landslide, carrying 49 states.
Throughout the 2016 presidential election, the Gallup Poll asked voters to name their biggest concerns about our country. The economy was consistently at the top of their list.
☕ Larry Kudlow interviewed Art Laffer on his radio on Saturday. The entire show is here, and it’s a great show, but the Laffer interview starts at about 3:35. Enjoy.
☕ Professor Brian Domitrovic hosted a seminar in Texas on Saturday on supply-side history. The readings included John Rutledge and a chapter from Robert Bartley’s The Seven Fat Years. The seminar was a joint project between students from Sam Houston State University and University of St. Thomas.