Posted by antonsirius on 4/14/2011 3:45:00 PM (view original):
Posted by silentpadna on 4/14/2011 2:56:00 PM (view original):
Maybe...it's been awhile since I read the studies. But the point still remains. There is a max value of revenue at some point where raising tax rates won't increase revenue. If spending is above it, you'll never get the revenue you need. Without substantial, probably painful spending cuts, discussions about tax rates for among the classes does nothing but obscure the real problem.
The problem with the Laffer Curve theory in application is that economists offer wildly different interpretations on where the optimal revenue point is. And that optimal revenue point will differ depending on what form of specific taxation you're talking about. So it's a hard thing to base concrete tax policy on.
I can't say I've ever seen a study claiming that the optimal overall rate for the US was as low as 16-19% though.
I think the Laffer curve theory has merit, but I'm not totally convinced it even looks the way it's pictured as published. It may well have more than one peak. I also believe it changes dramatically from time to time based on activity. I do, however think that with the anecdotal evidence we have, and if the curve is parabolic, that we are on the side of the curve where rates are inversely proportional to revenue. If we stayed limited in spending, we could eventually get the tax rates to some reasonable level. Of course, if spending were less than revenues, there would be two intersection points on the curve. I'm okay with the rate sitting just under where the peak is and on the side of higher rates (so that the
evil rich can pay their "fair share", whatever that is

).
Spending is entirely the key.