Quote:
Originally posted by sgtclub
I remember seeing a study referenced in the WSJ several years back, I think with reference to Ireland and some of the Nordic countries, but you may be right, that might have been low taxes correlative to higher growth (rather than tax revenues).
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Given the tax rates in most nordic countries, it would not be surprising that cutting their tax rate would increase revenue and, ultimately growth.
The dispute over the laffer curve is not whether in theory it is right. It is. The dispute is over the shape of the curve and where its peak (or peaks) are that maximize revenue, and also whether the revenue maximizing position changes in a dynamic, rather than static, world.
Put differently, you 1) have to know which side of the curve you are on. Even laffer's curve itself acknowledges that lowering taxes can lower revenues for a sizable range of tax rates. and 2) the fact that revenues go up in the short run from, e.g., a capital gains tax cut, does not mean that in the long run revenue will be higher, any more than sales volume during a promotional period can be used to predict overall sales.
