I was a graduate student in a STEM program when Reagan was elected and the Laffer curve was used to justify tax cuts. The problem that immediately stood out to me at the time was that neither the ordinate nor the abscissa in the Laffer graph had scales, so it was impossible to assess where, exactly, the inflection point occurred. Based on the symmetrical drawing, we’re meant to infer that a 50% tax rate is the point after which government revenue would fall, but Laffer wasn’t even willing to support that inference by showing the scale on the X axis!From the Wikipedia page on the Laffer curve: ” . . . however, the curve might not have only a single peak, nor must it peak symmetrically at whatever value maximizes tax revenue. . .”The Laffer
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Joel Eissenberg considers the following as important: Hot Topics, Laffer curve, politics, Taxes/regulation, top marginal income tax rates, US EConomics
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I was a graduate student in a STEM program when Reagan was elected and the Laffer curve was used to justify tax cuts. The problem that immediately stood out to me at the time was that neither the ordinate nor the abscissa in the Laffer graph had scales, so it was impossible to assess where, exactly, the inflection point occurred. Based on the symmetrical drawing, we’re meant to infer that a 50% tax rate is the point after which government revenue would fall, but Laffer wasn’t even willing to support that inference by showing the scale on the X axis!
From the Wikipedia page on the Laffer curve:
” . . . however, the curve might not have only a single peak, nor must it peak symmetrically at whatever value maximizes tax revenue. . .”
Kevin Drum has a post up linking to an article claiming that (a) economists across the political spectrum agree that the marginal top income tax rate should be increased and (b) that the optimal rate should be between 58% and 84%.
I’m not sure how much this matters, since the rich don’t get most of their wealth from salaries. I assume that the (bogus) Laffer curve incorporates all forms of taxation, but who knows?