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The Laughter Curve

Arthur Laffer writing at the Wall Street Comfort the Comfortable, Afflict the Afflicted Journal:

The whole purpose of a flat tax, à la 9-9-9, is to lower marginal tax rates and simplify the tax code. With lower marginal tax rates (and boy will marginal tax rates be lower with the 9-9-9 plan), both the demand for and the supply of labor and capital will increase. Output will soar, as will jobs. Tax revenues will also increase enormously—not because tax rates have increased, but because marginal tax rates have decreased.

By making the tax codes a lot simpler, we’d allow individuals and businesses to spend a lot less on maintaining tax records; filing taxes; hiring lawyers, accountants and tax-deferral experts; and lobbying Congress. As I wrote on this page earlier this year (“The 30-Cent Tax Premium,” April 18), for every dollar of business and personal income taxes paid, some 30 cents in out-of-pocket expenses also were paid to comply with the tax code. Under 9-9-9, these expenses would plummet without a penny being lost to the U.S. Treasury. It’s a win-win.

Here is your win-win (via Matt Yglesias):

[cont’d.]

TBogg

The Laughter Curve

Arthur Laffer writing at the Wall Street Comfort the Comfortable, Afflict the Afflicted Journal:

The whole purpose of a flat tax, à la 9-9-9, is to lower marginal tax rates and simplify the tax code. With lower marginal tax rates (and boy will marginal tax rates be lower with the 9-9-9 plan), both the demand for and the supply of labor and capital will increase. Output will soar, as will jobs. Tax revenues will also increase enormously—not because tax rates have increased, but because marginal tax rates have decreased.

By making the tax codes a lot simpler, we’d allow individuals and businesses to spend a lot less on maintaining tax records; filing taxes; hiring lawyers, accountants and tax-deferral experts; and lobbying Congress. As I wrote on this page earlier this year (“The 30-Cent Tax Premium,” April 18), for every dollar of business and personal income taxes paid, some 30 cents in out-of-pocket expenses also were paid to comply with the tax code. Under 9-9-9, these expenses would plummet without a penny being lost to the U.S. Treasury. It’s a win-win.

Here is your win-win (via Matt Yglesias)

I particularly enjoyed Laffer’s contention that businesses will no longer hire lawyers & lobbyists, which would probably be true for about seven hours before they would start complaining that 9% is onerous and  socialist and with those dollars they could be creating even more jobs!

Laffer adds:

A static revenue-neutral tax change requires static winners and losers. And this 9-9-9 plan has made certain that even on static terms those below the poverty line will be better off—period. Once the dynamics take hold, many of those below the poverty line will find good jobs and thus will rise above the poverty line and start paying taxes.

Woo-hoo! this is the kind of thinking (although not true) that everyone at the Wall Street Journal can get behind, right?

Nope.

From the WSJ comments:

But wait. It get’s better….

Because nothing quite creates jobs and the need for goods and services like …. discouraging consumption.

Masters of The Universe, folks! Give it up for them! No. Really. Give it up for them…

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TBogg

TBogg

Yeah. Like I would tell you....