Quote:
Originally posted by Spanky
Growing out of the Deficit is the foundation of the logic behind the Laffer curve. Is it not?
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No. I explained this last week. Laffer's curve hypothesized that there is a tax rate, t*, at which revenue is maximized. If the current tax rate is greater than t*, reducing the tax rate will increase revenue, through increased production/earning.
It is applicable regardless of whether there is a deficit--it goes only to revenue, and not to spending.
You are ascribing far more to Laffer than he himself claimed. "Growing out of the deficit" is a handy mantra that invokes principles of supply-side economics and the laffer curve, but is not, strictly speaking, necessarily supported by either of those approaches.
