Do you believe that the Laffer Curve exists? (If so, what rates create balance?)

[Fuzzybigfoot]

Explain why or why not.  If your answer is yes, which tax rates would be best?

[tpfkaw]

Yes, because it's common sense.  It is not possible that there is not a Laffer Curve.

[Frink]

Its literal existence and what side current tax rates are on is still a matter very much up for debate.

[○∙◄☻¥tπ[╪AV┼cVê└]

Well, obviously tax revenues would decline if tax rates went from 99.8% to 99.9%, so, yes.

[Fuzzybigfoot]

Its literal existence and what side current tax rates are on is still a matter very much up for debate.

That's what I was looking for.  I will modify the title to avoid confusion.

[tpfkaw]

The curve isn't static - since economic growth increases with lower tax rates, the tax rate which provides the maximum revenue approaches zero the longer the time period is that you're looking at.  My educated guess is that the function of the (flat) income tax rate that provides the maximum revenue is something along the lines of .5(t^-0.3) where t is in years.

[J. J.]

Yes, but is not the bell shaped curve Laffer drew on the napkin.

[Marokai Backbeat]

Yes, but it's grossly exaggerated by some. It's not a Laffer Squiggly Line or Laffer Obtuse Triangle. Even through simple observation would you be able to tell that we aren't on the "too-high" side of such a curve.

[opebo]

Yes, in context.  But the obvious course is to reject the context.

[The Mikado]

To the extent that the Laffer Curve suggests that the optimal tax rate is somewhere between 0% and 100%, then yes.

[Gustaf]

I don't get how you could say that it doesn't exist. It's hard to argue that there is not a revenue maximizing rate and that it is not different from 100% or 0%.

Wormguy is correct that the time perspective matters. I disagree though that it would approach 0 even in the long term, for several reasons. I think this overstates certain types of efficiency losses from taxes (incentives are more complex than that) and it also seems to ignore the possibility of certain efficiency increases from state intervention (public goods, enforcement of contracts, etc).

[opebo]

Wormguy is correct that the time perspective matters. I disagree though that it would approach 0 even in the long term, for several reasons. I think this overstates certain types of efficiency losses from taxes (incentives are more complex than that) and it also seems to ignore the possibility of certain efficiency increases from state intervention (public goods, enforcement of contracts, etc).

I thought it was based on effects on 'private' decisions - 'incentives' as it were - not on 'efficiency losses'.  The argument is that private lordlings of industry will opt not to order their income created for them if they don't get to keep most of it.  This says nothing about 'efficiency' - obviously the whole system of allowing these privileged control of everything is of dubious efficiency.

[Хahar 🤔]

To the extent that the Laffer Curve suggests that the optimal tax rate is somewhere between 0% and 100%, then yes.

Basically. That rate is far higher than Laffer's devotees suggest, though (and also rather higher than taxes ought to be).

[Fuzzybigfoot]

To the extent that the Laffer Curve suggests that the optimal tax rate is somewhere between 0% and 100%, then yes.

Do you have any specific guesses on exactly where, though?

[Gustaf]

Wormguy is correct that the time perspective matters. I disagree though that it would approach 0 even in the long term, for several reasons. I think this overstates certain types of efficiency losses from taxes (incentives are more complex than that) and it also seems to ignore the possibility of certain efficiency increases from state intervention (public goods, enforcement of contracts, etc).

I thought it was based on effects on 'private' decisions - 'incentives' as it were - not on 'efficiency losses'.  The argument is that private lordlings of industry will opt not to order their income created for them if they don't get to keep most of it.  This says nothing about 'efficiency' - obviously the whole system of allowing these privileged control of everything is of dubious efficiency.

That's the same thing. I know you don't like to admit it but there are differences in income between non-owners too. There would, for instance, be no incentive for people to work over-time or educate themselves to become doctors or engineers if taxes ate up all the added income from such endeavors. 

[🐒Gods of Prosperity🔱🐲💸]

i think it exists in the abstract, but i don't believe there is a rate that is optimal for all times or places. also the the regulatory environment will make a difference, as less regulation will be a lower burden and so allow the optimal tax rate to increase. if you really want a number, in this environment i'd guess in the general area of 45 percent (inclusive of all federal, state and local taxes).

[Earth]

No, not at all. It very much owes it's existence to an ideal, when revenue could fluctuate according to the specific historical situation, and not necessarily a set tax rate. It's essentially meaningless to weigh an idealized thought experiment so heavily.

Essentially, economics right there in a nutshell when it attempts to deal in variables. Brain-in-a-vat for the rich.

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[FEMA Camp Administrator]

I believe it exists, though I honestly don't know how to run numbers saying what the optimal tax rate is. I'm just looking at what I consider common sense, which is:

1) Lower tax rates cause business growth
2) Business growth means more circulation of the dollar
3) More circulation of the dollar means more oppurtunities for it to be taxed
4) The more times that same amount of money is taxed, the more money there is going to the government
5) The more money going to the government, the more reveues it has, and the lower the deficit

I'm assuming that the Laffer curve indicates that supply side economics will eventually create a budget surplus, which I say works as long as there is a long, uninterrupted period of peace time and prosperity.

[opebo]

I'm assuming that the Laffer curve indicates that supply side economics will eventually create a budget surplus, which I say works as long as there is a long, uninterrupted period of peace time and prosperity.

Alas supply-side economics always creates a depression/deflation through inadequacy of demand, Cathcon.

[Nichlemn]

I don't think it has to exist (that is, it's plausible that a 100% tax rate could maximise revenue if people work for status for instance) however, that scenario is highly unlikely.

As a general tool I think it's counter-productive for conservatives, because current tax levels are almost certainly to the left of the maximum and it allows an easy straw man for the left, as well as framing the debate as something conservatives almost certainly don't want (i.e. that maximising tax revenue is a good thing). For an extreme example, would it be better to have 10% average taxes producing a revenue of X or 50% average taxes producing a revenue of 1.01X? So long as you put some weighting on the welfare of taxpayers, the optimal tax rate is considerably to the left of the Laffer Curve maximum.

[Filuwaúrdjan]

It's an abstract concept. So, on the one hand, yes. Of course it does. As an abstract concept. On the other hand, no, it doesn't and don't be so bloody silly. Do dialectics exist? And so on.

[minionofmidas]

"the Laffer curve hypothesis is that a 100% tax rate will also generate no revenue because at such a rate there is no longer any incentive for a rational taxpayer to earn any income"

An absurd statement on several levels.