Do High Taxes Raise More Money?
Tim Groseclose, professor of political science and economics at UCLA, deserves all the attention that he’s receiving as a result of two courses he’s made for Prager University.
First, he’s courageous. Any professor willing to take on his peers, almost all of whom reject just about everything he stands for, has courage. Second, he’s very clear. His first course, Proving Media Bias, presents scholarship-based evidence of the media’s left-wing tilt and concludes with a startling vision of what the country would like if that bias didn’t exist.
His new course -- Do High Taxes Raise More Money? -- is the best explanation I’ve ever seen of the Laffer Curve. Using impeccable liberal sources, Groseclose demonstrates the point at which taxes start to bring in less revenue.
On a general note, if you haven’t visited Prager University yet, please do so. You’re in for a treat. We’re assembling a dream team faculty: the best people, presenting their best ideas. It’s literally something to see. Tim Groseclose and his two courses are a shining example.
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May '12
Re: Do High Taxes Raise More Money?
liberal jim,
More than 100% of GDP was not spent during WW2, that is impossible, government spending is a part of GDP. The most you can spend is 100% of GDP, and that would be very difficult, you would have to be North Korea. And the Hatch Amendment has a provision in it that would allow government to break the cap in times of a national crisis (a part that I would like to see slightly modified to make maintaining crisis mode a little more difficult).
I'm not understanding your criticism, right now government it is spending more than it can collect. I'm not saying government should spend as much as it can collect, I'm saying government shouldn't spend more than it can collect. Personally, I would like to see federal government spending lower than 20%, lower than 18%. But getting a BBA to me seems like it would be a huge step in the right direction toward fiscal sanity.
Edited on September 21, 2012 at 6:15pmSep '10
Re: Do High Taxes Raise More Money?
Richard.
You are correct about WW2.
If I thought that some law could make career politicians act as if they were not career politicians I might be more sympathetic to your point of view. If the Hatch Amendment was passed it would mean a perpetual natural crisis would be declared.
The constitution clearly states that only Congress can declare war and yet we have numerous "wars" and thousands killed since the last declared war. I submitt to you if the federal government can get around
Sep '10
Re: Do High Taxes Raise More Money?
Sorry
can get around the Constitution on a matter like war. Something like a balance budget amendment is meaningless.
The government is 30% bigger than it should be and there is not the political courage on the part of "conservatives" to even propose reducing its size. To advocate doing away with departments and/or agency might put heir political futures at risk so instead they advocate for this or that gimmick while continually increasing spending and the borrowing to pay for it.
In my view the country continues to head in the same direction under Obama as it did under Bush. If Romney is elected it will continue and things will not improve. To me this election is just about who will be blamed, If Romney is elected conservatives will be despite the fact there has not been a conservative in the WH since Reagan.
Jun '10
Re: Do High Taxes Raise More Money?
Dumb question alert!
Does Laffer refer to "Federal Income" taxes or all Federal + State + Local + Property + Cap Gains, etc.
I agree with Larry Koler about the "teaching tool" aspect, so maybe narrowing it down isn't an ultimate goal, but what taxes are included in Laffer's assumptions?
Sep '12
Re: Do High Taxes Raise More Money?
Eeyore:Dumb question alert!
Does Laffer refer to "Federal Income" taxes or all Federal + State + Local + Property + Cap Gains, etc.
The kind of taxes is an income tax of some sort (as described by the speaker in the video), as the x-axis units is in %, and is denoted as a rate. It's a very simplified model that says that some rates are better than others in the context of revenue maximization, taken by folks who profess it to mean that low rates are better than high rates. Are they right? The model doesn't say...
That's all it is.
Just an aside, the very same notion can be used to model sales vs. price in exactly the same way, there being an optimum price to maximize sales. Or weight gain vs. calories consumed. Except in these two examples, it works as a more appropriate model because it doesn't collapse anything as complex as income taxes down to a single axis. But they still don't tell you where the optimal x is that maximizes y.
To be fair, the plots that they show are not models. The plots should be taken as the outputs of models.