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The Laffer Curve, ctd

A great article on why the opposition Tories need to have the cojones to take on the flat-earth economics of confiscatory tax.

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9 comments to The Laffer Curve, ctd

  • An abolutely excellent treatise on the Laffer Curve and the fiscal impact of Darlings budget here:

    http://plonquer.blogspot.com/2009/04/alsitair-darling-discovers-laffer-curve.html#comments

    Honestly, you couldn’t make it up

  • The 50% tax rate (with National Insurance and VAT on top) is of course an outrage, but politics aside, for higher earners, this is past the top of the Laffer curve.

    But rather than just getting excited about a couple of hundred thousand people at the top, should we not also think about the ten million people who face marginal tax rates between 70% and 100% (with National Insurance and VAT on top) because of means testing, benefit withdrawal and income tax?

  • Johnathan Pearce

    Mark, absolutely.

  • RW

    If the Tories had immediately come out against the 50% (+whatever) proposal, myopic public attention would have been led to view this as a class issue rather than a financial one. No matter how compelling the financial arguments against, nuLiebore spinners would bury these and all other criticisms of their stewardship of the economy under a slurry of politics of envy.

    By playing a long game, IMHO the Tories have done the sensible thing: let the financial punditry expose the lunacy for them and then be convinced by their arguments.

    Diversionary tactics in the last week: the proposal to change the rules for accession to the throne, followed by the proposal to reduce a lot of speed limits. Anything, but anything, to deflect attention from the real issues.

  • Laird

    Scot, great link. Thanks for posting it.

  • Paul Marks

    “Playing the long game”.

    Trouble is that time has run out for the long game – absurd “hopeful” signs of more consumer spending and more lending in both Britain and the United States not withstanding (indeed these “hopeful” signs are the opposite of hopeful – they mean there is no hope for the economy).

    Economic (although, hopefully, not social) collapse is now unavoidable.

    The government spending has been approved and the falling apart will occur – period.

    Now it is a matter of trying to rebuild after the economic smash up.

    The present notion of government as providing most things for most people will not be possible.

    But sadly the ideology of the poltical leadership (including the leadership of the Conservative party) has not understood this fact.

    The general public are not being warned or prepared.

    The leadership of this country (whether in academia, the media or politics) has failed them.

    After all we live in a world were “business leader” is defined as someone who goes to the government to ask for some form of bailout.

    Whether it is finance, manufacturing, farming, or retail – the people with the loudest voices have proved to be spineless.

  • Lee Moore

    Whatever the correct maths is, I am not wholly convinced that maximising tax revenues should be the fundamental objective of a Conservative government.

  • Paul Marks

    Agreed.

  • For an explanation of the theory of the Laffer Curve and its consequences, see the following lectures:

    Part 1

    Part 2

    Part 3

    They’re endorsed by Arthur Laffer himself.