Quote:
Originally posted by Mmmm, Burger (C.J.)
Except the CBO study shows it is valid in the middle as well. What CBO showed was that we are on the uphill portion of the curve such that reducing taxes reduces revenue.
Sure, you can say the curve is lumpy or has multiple maxima, but there's even less support for that. Is it parabolic? No. Does it have a single maximum? Perhaps.
Club--your problem is that you think that t* (the rate obtaining maximum tax revenue) is somewhere below current rates.
Wonk--your problem is that you're trying to trash a very simplisitic theory that never purported to prove much of anything beyond a general principle on the ground that it is simplistic and fails to prove anything beyond a general principle. It's like saying supply and demand curves are an invalid theory because supply and demand have more determinants than price alone.
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I was talking about the Wikipedia piece, not the CBO study. However, I have never placed a whole lot of faith in the methods of the CBO. They seem to have a real talent for interpreting ambigupus data in a way that always supports their hypothesis.
My big disagreement with the Laffer curve is that I don't believe the demand for income is elastic. In fact, I personally believe it is the most inelastic thing in the world, with the possible exception of the demand for sex, and even sex has a refractory period.
Think about it for a moment. I demand for income were elastic, then why would anybody ever work once they had reached the point where their wealth was in excess of what they needed to support a couple of generations. And yet, Tiger Woods and Michael Jordan haven't retired. Nor has Warren Buffet and he's in his late 60s, isn't he?
