Tales of the Woman from Wasilla

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The Laffer curve isn't a mathematical theorem or ANYWHERE CLOSE. It is a curve. The major features of the curve are that at the two tax rates at the end, there are no taxes collected, and that somewhere in the middle, there is an absolute maximum. Now, if we assume that the two end tax rates are zero, but that they are above that elsewhere, then the notion of an absolute maximum isn't that hard to stumble upon. Heck, even then, the Laffer curve can be questioned, because socialist systems can be argued to work from an effective 100% tax rate, but their governments still had money during certain periods of time.

Additionally, anything beyond the three facts 0% tax rate has 0 taxes, 100% tax rate has 0 taxes, and somewhere between 0-100% tax rate has revenue maximizing taxes, is not proved by the Laffer curve, however, Laffer is known for believing that we are on right side of his curve and thus need to lower taxes, despite the fact that most economists believe that we are on the left side of the curve and that revenue maximization would occur with higher taxes. Do economists use that curve though? No, it is basically utterly irrelevant to their concerns and basically uses a bit of knowledge basic enough that anyone with a bit of knowledge could have figured it out. Heck, Laffer doesn't even take credit for originating the idea, so I mean, there is no reason to laud Laffer too much.

Since the revenue function is positive somewhere in the middle a maximum of revenue exists for some rate of taxation. That is mathematics, not economics. Revenues collected are a function of tax rate. Laffer was right on mathematical grounds.

ruveyn

And ruveyn, I am quite certain that you are not interested in seeing the revenue-maximizing tax rate implemented. Other considerations than just government revenue come into play when determining a desirable tax rate.

Quite so. But I do want Laffer credited with being right, when he was right. It is only just. The idea of maximizing revenue to the State, just because it is the State, if find most bothersome.

I propose a tax rate that gives the government just enough revenue to keep the peace and not a cent more. I consider the State a necessary evil, not a positive good. The State exists only because humans are not (in general) good.

ruveyn

^I cannot see your image.

I cannot understand what it means, but maybe that is the point?

The neo-Laffer curve is a satirical construct created by Martin Gardner to establish the fallacy of the Laffer Curve... The truth of the matter is that the optimal tax rate for government revenue is guided by intensely immediate circumstances and numerous, nigh-uncountable variables, and all the wicked webs that make up history Laffer's fallacy, whether conscious or unconscious, occurred when he assumed that simply because two ends of his graph could be easily examined and quantified, that the rest of the graph would follow the same rules and thus arrive at a "point". In fact, not only did the graph not follow those rules, it could not by definition of the system it represented.

Ohhh. ok. *claire smiles and pretends to get it*