cross-posted from: https://lemmit.online/post/5566633
This is an automated archive made by the Lemmit Bot.
The original was posted on /r/todayilearned by /u/MechCADdie on 2025-04-04 08:19:11+00:00.
cross-posted from: https://lemmit.online/post/5566633
This is an automated archive made by the Lemmit Bot.
The original was posted on /r/todayilearned by /u/MechCADdie on 2025-04-04 08:19:11+00:00.
Worth noting Laffers claim had already been proven to be likely true by the time that was filmed. The claim is you can set a tax rate so high that it can encourage tax evasion, avoidance, and fraud and that reducing the rate below this level can bring in as much if not more tax revenue which was demonstrated to be likely true in 1983.
Or we could just fund the IRS since it’s a profit center.
We could do both?
proven to be true? that is news to me.
proven to be likely true and you can look at the 1983 tax cuts for evidence of it being likely true.
So the cut that went into effect in '83 was passed in '81, just before a recession hit. So the US seeing an increase in revenue compared to the few years before that where unemployment was up over 8% and gdp dropping, is really more about the economy recovering than tax policy changes.
Except the size of the cut was substantial and we still brought in more revenue because of people moving wealth from foreign banks to US ones. Your explanation doesn’t account for this.
proven likely true means not proven true. Way to many factors. I personally thing the theory has a sorta merit but is very limited and vague (in the sense of there is no identification of where the exact sweet spot of taxation levels are). For example the punitive measures for not paying taxes at very high levels need to be very severe to curtail such behavior. So five figure owning person or mom and pop shop you give a slap on the wrist. Maybe 10% of owed added. Wealthiest individuals and companies get knocked completely out of their level so like 500% of what was owed.
To be clear it isn’t a theory. It really is an idea explained on a cocktail napkin. There seems to be a rate that if you reduce it under you get more recenue which worked once in 1983. There’s nothing to support further cuts though
I would not even say it worked once in 83. Lower rates are one possible reason but like anything with the economy there are plenty of factors including cyclical changes that could explain it.
By all indicators more money was moved back into the USA from abroad and tax revenues were up. That seems to suggest the idea has some degree of merit
I mean that sounds more like a tax haven situation. Honestly to stop that I think countries should require companies meet their tax rate globally where they can deduct what they pay elsewhere.
Yes the money was moved out of the tax havens because it was preferable to have here after the top rates were reduced. That’s why it is considered to be a viable notion
Laffer curve in political practice is BS. It is proven that you raise 0 revenue at 100% tax rate because no one is actually paid to work, then. The political distortion is “therefore, always lower taxes for more revenue”.
No it makes sense it just isn’t scientific nor does it justify any cut after 1983.
That was my point on how it is misused.