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Excellent saying. Can be extended to politics as well.
doesn’t have to be curved. Nor does a Laffer curve
Pretty sure there is an inconsistency there. A curve should curve, otherwise it shouldn't be called a curve....
But I take your point - except the whole point of the theorem behind the drawing was that revenues would fall either side of a given point. In the nearly 100 years of data that clearly isn't happening. So either it happens above 92% tax or below 28%. He advocates based on his ideas that we should only try lowering tax to find the point. He never suggested trying >90% despite the data showing it might be up there. Nor coukd he explain how you could get revenue at greater than 100% tax. The line is basically statistically flat. Maybe but seems unlikely given the nature of the theorem.
How do GDP growth figures compare in those periods?
To themselves or tax or revenue? I really wish I could find the graph again. From memory it bounced around and in a very very general sense tracked tax revenue, but only vaguely. I suspect an analysis would show a relationship so statistically weak as to be basically meaningless.
Not the one I was looking for but it shows tax rate vs gdp. Does show revenue though. Hauser's Law (not a law anymore that Laffers curve curves). Basically says tax revenue will be 19.5% regardless of anything else. The data backs up up to a much greater degree than Ladder.
https://angrybearblog.com/2011/01/few-graphs-on-real-gdp-growth-rates.html
“Laffer Curve” is not a name for a graph of tax level vs tax expenditure. The Laffer Curve is Laffer’s drawing of what he wants that graph to look like. You can’t put real world data into the Laffer Curve. Or rather, you can, and it’ll instantly stop being the Laffer Curve
Not true, because in the wiki link I posted:
1) There are images of the laffer curve with estimated/real numbers and still refers to them as a laffer curve.
2) Caption(s) prove there is no specific ‘shape’ a laffer curve has to conform to: “Figure compares the Laffer curve under the assumption that firms do not respond to changes in the tax rate (Naïve) to the Laffer curve when firms adjust their prices”
3) There’s are laffer curves with real/estimated figures. One of the captions. “An asymmetric Laffer curve with a maximum revenue point at around a 70% tax rate, as estimated by Trabandt and Uhlig (2011)”
4) The idea that Laffer claims that there is one identical curve that fits every tax in every country in every time period is self evidently absurd. (By your definition of Laffer Curve or mine.)
5) You can’t apply Rolle’s Theorem to a graph with no numbers.
I’m a bit over this thread
I thought you would be! 😀
Pretty sure there is an inconsistency there. A curve should curve, otherwise it shouldn’t be called a curve….
Not AFAIK. Think about the Laffer curve for a Cheese tax on Mars. It's 0 at 0pc. It's 0 at 100pc. And there is literally no market for cheese so it's zero at all points between. In that case the "curve" is a perfectly straight line.
So either it happens above 92% tax
If you've found a tax where revenue is still increasing at 92pc that is totally consistent with Laffer, because we can all agree that revenue will go to roughly zero at 100pc. It just means the drop is steep over the last 8pc for that taxable thing.
This thread shows that the old saying 'If all the economists were laid end to end, they wouldn't reach a conclusion' also applies to armchair economists on a bike forum.
And there is literally no market for cheese so it’s zero at all points between. In t
Not a Laffer Curve then, as it doesn't maximise revenue. Althought here is a much evidence for cheese on the moon as there is for a Laffer curve so.....
If you’ve found a tax where revenue is still increasing at 92pc that is totally consistent with Laffer,
I found one where it is the statistically insignificantly different across a wide range of tax levels, so completely inconsistent with Laffers theorem but entirely consistent with Hauser, which is antithetical to Laffer.
also applies to armchair economists on a bike forum.
How do you know they are armchair?
Also, is a conclusion a desirable goal? Economics isn't like a 6th form essay.
Not a Laffer Curve then, as it doesn’t maximise revenue.
Not sure what you mean by "it doesn’t maximise revenue", but it self evidently *is* a straight Laffer Curve. (If you want to get super pedantic lets imagine two spacemen visit an sell one cheese to each other so you have one non-zero data point with a straight line either side.)
statistically insignificantly different across a wide range of tax levels, so completely inconsistent
It's totally consistent, as long as 0% could be 0 revenue and 100pc could be ~0% you're golden.
but it self evidently *is* a straight Laffer Curve
STOP!!!
Would taxing people who work for the NHS at 90% plus tax rate make the NHS self funding?
Does Amazon pay enough in taxes?
I’ve never understood why we tax income and not just expenditure.
Because taxing expenditure is too easy to fiddle. Think about how many transactions you made that that no-one in government knew about?
Given that most of us work for a single company, and that company is incorporated and regulated by the state, it's easy to force them to deduct tax before they pay it to you. Your employer has no incentive to cheat and every incentive to do it right. The happy side-effect is that we also don't usually have to worry about tax returns. Win/win.
you probably could just tax expenditure, but only once cash has effectively been outlawed (or you taxed people on withdrawing cash I guess). The issue is that if you assumed that doubled VAT (to 40%) but all other countries stayed at their current rate, there's going to be lots of people just buying stuff abroad.
I don't personally believe the 'rich people can spend less' theorum. Yes, sure they can die leaving more money behind, but if someone earning 100k/year only spends half of it, because they don't like paying tax, then they've got the same lifestyle as someone earning 50k, until they
a) change their mind and spend it, and get taxed at that point
b) money is given away when they die, to people who spend it, and it gets taxed at that point
Would taxing people who work for the NHS at 90% plus tax rate make the NHS self funding?
Chapeau. 😀