So, I had a couple of things to deal with today, and I’m not feeling as spry as I wish, so I won’t get to lay out some things as I wanted to today. But, with rain, there’s a rainbow! I’ll split this, and, hopefully, by splitting, make more sense to the lay person.
For the people who already know of such, it never hurts to see this.
Wiki does a piss poor job of explaining the Laffer curve, but, I’ll quote a bit of it.
In economics, the Laffer curve is a representation of the relationship between possible rates of taxation and the resulting levels of government revenue. It illustrates the concept of taxable income elasticity—i.e., taxable income will change in response to changes in the rate of taxation. It postulates that no tax revenue will be raised at the extreme tax rates of 0% and 100% and that there must be at least one rate where tax revenue would be a non-zero maximum.
The Laffer curve is typically represented as a graph which starts at 0% tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100% tax rate. The actual existence and shape of the curve is uncertain and disputed.
One potential result of the Laffer curve is that increasing tax rates beyond a certain point will be counter-productive for raising further tax revenue. A hypothetical Laffer curve for any given economy can only be estimated and such estimates are controversial.
I do this in hopes some leftard will read the criticisms and come here to argue the points leftards attempt to make against this simple thought.
You see, leftards hate this notion. But, the notion is logical, provable in theory, and demonstrable in practice. In other words, by now, any other notion which can be held to such scrutiny would be declared a “law” in economic theory.
Laffer’s curve is illustrated above. The notion is of two parts. One addresses tax rates and government revenue, and the other tax rates and economic growth.
Clearly, if the tax rate of an economy was zero, then, the government would receive no money from the economic activity of said economy. Additionally, and clearly, if the tax rate was 100%, the government would receive no revenue from the taxes because no one would willingly work for nothing. <—- This is really what the leftards get exercised about.
Laffer says, paraphrasing, there’s a point between 0% and 100% which maximizes government revenue. Again, this isn’t hard to conceive. Any idiot would know this. Laffer doesn’t say what percentage, but, there is a point with maximizes government revenue, the tax rate being somewhere between 0 and 100%. On the graph above, it is represented as point “B”.
But, as clear as point “B” being true, this also, then, states that any point beyond point “B” causes a decrease in the government revenue of said economy.
That is to say, if the maximizing point of the taxation rate is 50%, then a taxation rate of 51% would then cause a decrease in government revenue because it decreases the incentive to work. <— Leftards hate this obviously true statement!
But, there’s more to the curve. And, I think, this is where it gets hard for some people who don’t typically think about economics and the like.
If the above is true, which it is most obviously so, then, there must be a point in taxation which optimizes economic growth!
For the people who screamed, “yeh, it’s called zero taxes!!!” …….. I’m sorry, but, that’s not true. An economy, which doesn’t provide for governance will not be an economy for very long. Just like no one will work for nothing in an economy which taxes 100%, no one will work for an economy for nothing.
In all economies, things must be provided and maintained. This is true in micro and macro. For those who screamed “tariff the imports and do away with taxes!!!” …… A tariff is simply another form of taxation. Sure, the importers would pay the tariffs, and do, but, the people pay the price difference. If we decided to tariff all computer processors imported by $25, then they would sell for $25 more than they would have, had they not been tariffed. So, anyone buying the imported good, would be the one’s who paid the tax. If they didn’t sell, they wouldn’t be imported, and thus, no revenue gained. Tariffs are a form of taxes.
So, we must have taxes of some sort to maintain and provide. By provide, I mean things such as providing for the common defense of the people, paying judges, maintaining law and order, …… etc. …. etc. ….. these things, and much more must be done. How much more and where to draw the line? That’s up to the people. But, there are things which government does which is conducive for economic growth. Defense is primary, that is to say, if your country was frequently marauded because the defense wasn’t funded, then, the economy would not grow. If the US, for instance, decided to no longer support the highway systems because of lack of tax revenue, then, that too, would have a negative effect on our economy.
So, our economy must be maintained by a certain level of taxation to maximize the economic growth of the people. The level of taxation to maximize economic growth, obviously, will never exceed the level of taxation to maximize government revenue. Again, this is simple to understand. If an economy raises the tax rate, and decreases it’s revenue, then, obviously, there was less money to be taxed. Elementary math dictates this.
Additionally, if the economy’s government isn’t properly funded, or properly managed, then we’ll see a decline in the economy. For instance if the roads were not properly maintained.
What does this have to do with anything? …… Well …. KANSAS!!!!!!!!!
The world should be focused on Kansas, right now, today, and watching the left. The left is pulling every dirty trick, pouring money in from …… well God knows where, to defeat conservatives in Kansas. Yes, the Senate may very well be in the balance this election, but, more, Governor Brownback instilled (with the legislature) a series of tax cuts. Unfortunately, because of the global and national economy, the projected growth didn’t happen. The lunatics are pouncing. And, the conservative notion that lower taxes are better is being attacked, and, poorly defended.
Tomorrow, we get to play a bit of show and tell. It took me a while to find the official data, and I can’t help but wonder why. But, where’s there’s smoke, there’s fire, and I’ve got some smoke. Had I more time and feeling better, I’d light some fire, as well. But, this should have already been done.
While the notion of the Laffer Curve is simple, and easy to understand, it produces things which are more profound and things more complex. But, literally, it is a notion which can grow things.