In response to:

Revenge of the Laffer Curve…Again and Again and Again

Gil67 Wrote: Mar 28, 2013 7:13 PM
Right on. Please educate me. In 1983, the US federal governement instituted the largest tax increase to date by raising the Social Security taxes to prevent insolvency. How much was raised relative to the percent increase? The laffer curve primarily forecasts revenue performance based on Investor Class marginal tax rates. Inorder to reduce those rates, Reagan, Bush, etc. lowered the taxes paid by the bottom 50%. This was a bad deal. not only did it unnecesarily reduce revenue, it removed almost 50% of the earning population from concern for spending limits. The only way to reduce spending is to start making the middle class and lower income groups pay for the spending.
jasonQ42 Wrote: Mar 28, 2013 8:17 PM
Interestingly, my understanding of history and math is fundamentally different that yours. You say "In 1983, the US federal government instituted the largest tax increase to date by raising the Social Security taxes to prevent insolvency" and then later claim that this lowered taxes for the "bottom 50%." But SS taxes only accrue to about the first 100 grand of income. Thus increasing them increases the share of income that the bottom 50% are paying in taxes, while having little effect on the wealthy.. Additionally, Reagan continued and expanded on the trend of huge reductions in the income tax and capital gains tax that mostly hit the wealthy.

If I live to be 100 years old, I suspect I’ll still be futilely trying to educate politicians that there’s not a simplistic linear relationship between tax rates and tax revenue.

You can’t double tax rates, for instance, and expect to double tax revenue. Simply stated, there’s another variable – called taxable income – that needs to be added to the equation. This simple insight is what gives us the Laffer Curve.

This is common sense in the business community. No restaurant owner would ever be foolish enough to think that revenues will double if all...