This video reviews real-world evidence showing that changes in marginal tax rates can have a significant impact on taxable income, thus leading to substantial amounts of revenue feedback. In a few cases, tax-rate reductions even “pay for themselves,” though the key lesson is the more modest point that pro-growth changes in tax policy will have a positive impact on economic performance and that good tax cuts therefore do not “cost” the government much in terms of foregone tax revenue. This video is second installment of a three-part series. Part I reviews theoretical relationship between tax rates, taxable income, and tax revenue. Part III discusses how the revenue-estimating process in Washington can be improved. For more information please visit the Center for Freedom and Prosperity’s web site: www.freedomandprosperity.org.
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Very true. The economy tends to expand as the population tends to increase. As a result of this, tax revenue will tend to increase in real numbers regardless of what the tax rate is. For example, from the years 1960-2000, real tax revenue increased each successive year (excluding 1971 and 1983) despite the numerous adjustments in tax rates that occured between those 40 years. Another note, tax revenue increased even more after the Clinton tax increase of 1993.
In time, inflation will go large on Obama’s watch. Maybe, in the future Obama and Carter could goon a tour together. Obama will do his best to kill the american dream. President GW Bush had a hand in it , too.
Lower taxes are not necessarily a bad thing and neither is more controversial topics such as redistribution of wealth. Both have ideological principles associated with them, but both are tools that can help the economy, but just like medicine they have to be administered at the appropriate time to have a positive effect. Extra revenue from growth taxation could be used to hinder a downturn in the economy coupled with a stimulating tax decrease for consumers and corporations.
I thot that the erst video on lafer curv was v good so I clicked on part 2. but this one is stoopid. ideological. even stoopid like me knows that 1980 was between a duble dip recesion and comparing it with mid 80 when the markets were hot and there was paper wealth is decitfool. and heck, ireland in 80′s had stonehenge and in 04 the world had changed. check out ireland housing prices. i might be stoopid, but u are either stoopid or misleading. pl think cleanly and teach with intelectual honesty.
He doesn’t seem to make the case at all that the Reagan tax cuts did anything to revenue. Just because revenue grew between 1980 and 1988, even by alot, does not mean that the tax cuts were necessarily responsible for some or even any of it. Logically speaking, it just doesn’t follow.
The 3% decline could also have something to do with the recession that happened to occur around that time too.. So lost jobs and the fed increasing interest rates to combat inflation.
In 2003, the United States Department of the Treasury released a non-partisan economic study showing that the 1981 tax act produced a major loss in government revenues of almost 3% of GDP. I posted a link, but it didn’t take or was removed (it is mentioned in the Wikopedia article).
Maybe the claims of the lafer curve are real, but, so far the proponents have only offered evidence that could be explained by other factors or collinarity. I’m not ready to believe it on their word.
you do put out a report and i will listen, dont just bag people out, and please back it up, not with Utopia ideals from econometrics class
Actually, it was the supply shock of oil that helped cause it.
Granted, high interest rates may have helped it, but supply side economics still helped ease the burden of the supply shock, and help things at the time.
Can you, or Cutplains link me to anything?
Actually, less taxes didn’t help inflation go down. The federal reserve increased interest rates. High interest rates caused the recession of the early 80′s. As soon as interest rates came down, we were back on the road to recovery.
Carter also had one of the largest inflation rates in the last 100 or so years.
Something helped by less taxes on productive behavior.
It isn’t bullshit.
Link?
Laffer Curve = Win. :3
True. Look how many jobs were created under Reagan vs Carter. It’s almost the same. So, this whole trickle down stuff is all bs.
In 2003, the United States Department of the Treasury released a non-partisan economic study showing that the 1981 tax act produced a major loss in government revenues of almost 3% of GDP.
Russia was booming after communism fell. It’s growth was astronomical, all because of conservative tax policies.
Dude, did you fail econometrics?
I want to see the form of the statistical model, the number of observations, it’s dependent variable (raw $,percent change …) and independent variables (factors) and the transformations on each, the result and statistical diagnostics for the technique used. Once we get this we can evaluate the factors to see how it contributes to the change in the dependent variable.
The Russian economy is doing great! Retards!!!
Your about as economically literate as Barrack Obama or John McCain
Dude,
Didn’t you look at the initial explanation. The other factors are:
1. 7% population size
2. 44% cumulative inflation from 1980 to 1988
3. Revenue increased 5 times (400%)
Obviously the Laffer curve had a non trivial effect.
Saying it don’t make it so. Show us the math and the importance of each of the factors.
actually the Irish example kind of proves this, until 1990 or so Ireland was one of hte poorest countries in western europe despite an educated population they then cut corporate taxes and created incentive for high tech companies to come, Ireland now has the same GDP per capita as the United States after being a border line second world country until 1990
“Voodoo economics?” Tell me, just how many different examples do you need that the Laffer Curve is a proven economic law?
I’ve said it before, the laffer curve is a sham based on no empirical evidence of research carried out by Art Laffer.
Here, Mr. Mitchell is trying to convince us that all birds are black by showing us a few ravens.