More like :Let's say taxes (x-axis) really start at the apex of y . The Y-axis is the economy*. The whole left of the apex doesn't exist because no level of taxation "makes" nor corresponds to higher growth in the economy. Yeah, I know you didn't get that and my only economics class was home ec in the 9th* grade.
This is the laffer curve or "laughter curve" if you prefer. Like other hypothetical relationships in economics, it may or may not apply to real economies. In any case no one knows where the maximum lies. And there has never been a an income tax decrease in the U.S. in modern times that wasn't accompanied by other types of tax increase and/or government spending increase. As increases in other taxes or spending affect revenue, it is difficult to accurately sort out the various contributors to changes in revenue. This is made especially difficult because there is always lag. Those economists who have tried, have all concluded that there is no evidence yet that supports the idea that, in practice, decreases in the income tax will result in increased revenues. The internet is rife with articles on this subject. Most likely, if the laffer curve has any significance in real economies, the maximum lies quite far to the right. In any case there is little doubt that the current income tax rates in the U.S. would lie well to the left of the Maximum, if indeed the curve is valid at all. Let us not confuse conjecture with reality. The Laffer curve was postulated by Laffer. It is purely hypothetical, and "The actual existence and shape of the curve is uncertain and disputed." see for example: Irvin B. Tucker (2010), Survey of Economics, Cengage Learning, p. 341, ISBN 9781439040546
you are kidding me. We have more room? to tax more. why the hell should they be taking our earning any way. it is almost all going to pay off debt and overspending any way. There is no reason to tax and place a drag on the economy. just spend your lefty asses off an leave our incomes alone. and keep the crooked IRS out of our lives. note. there are studies which speculate the curve would break at a tax rate of 33 percent or less. Obviously any study on this subject is part fantasy because you can't hold every variable steady. But... When you fica fico state and local many americans are paying 50 percent or more in taxes. We are way past the left for the productive part of our society. The revenues needs to come by turning freeloaders into tax payers.
of course keynes stated in a recession you should decrease taxes to raise revenue... he was bright. for instance... http://www.forbes.com/sites/thomasdelbeccaro/2012/12/05/keynes-would-not-raise-taxes-today/ âNor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the budget.â By writing that, Keynes wanted others to understand that tax policy should be guided to the right level so as to not discourage income but, instead, to maximize income and therefore revenues. Keynes was not finished there, however. He went on to explain: âFor to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still moreâand who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.
God help us all! Maybe if you tried divorcing in your mind the phrase "decrease taxes" from the phrase "raise revenue", you might have a chance of figuring out why Keynes thought lowering taxes, could be helpful in a recession. Here is a hint: It did not have anything to do with increasing government revenues.
The liberal mind makes itself impenetrable in school or are you all just born that way? not only would a tax decrease stimulate the economy but Keynes tell us... âNor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the budget.â
Read what you just quoted there jem, think outside the box. What assumptions are you making ? Ask yourself what if...
I already did think outside the box. What are you saying. keynes was intelligent hence he had to be a supply sider and demand sider.
A review of the economic research on the effects of raising ordinary income tax rates Recent research implies a revenue-maximizing top effective federal income tax rate of roughly 68.7 percent. This is nearly twice the top 35 percent effective marginal ordinary income tax rate that prevailed at the end of 2012, and 27.5 percentage points higher than the 41.2 percent rate in 2013.2 This would mean a top statutory income tax rate of 66.1 percent, 26.5 percentage points above the prevailing 39.6 percent top statutory rate. Analyses of top tax rate changes since World War II show that higher rates have no statistically significant impact on factors driving economic growthâprivate saving, investment levels, labor participation rates, and labor productivityânor on overall economic growth rates.