Political Book Summaries, Reviews and Opinions

Political Book Summaries, Reviews and Opinions

Videos on Laffer Curve and Fair Tax

Here are some interesting videos a reader left in a comment. They are about the Laffer curve and explain it really well. I agreed with most of what was in there. They’re worth watching. One of the videos makes a (bad) mistake when it shows specific numbers for the Laffer Curve. An important thing to understand is that no one knows where point “B” is. Is the point of highest revenue at 20%? 25%? 33%? 75%? Finding rock-solid evidence of exactly where point B is would be like finding the pot of gold at the end of the rainbow. Plus I’d personally buy you a cookie. So watch, enjoy. It’s not a very fancy video, I’ll give it a C- in quality of production, but the information is pretty good, so an solid B+.

Additionally, there are some campy cutaway scenes to politicians the video creater doesn’t like and some name calling. I found it very unproductive and unhelpful to the video or the debate. There was no argument made about the people in the pictures, just a random insinuation these are bad people. That’s no way to win an argument, it just makes the guy making the attacks look desperate.

The discussion of Dynamic vs. Static scoring in the end is really good. I’ve heard the story example before, but it’s always amusing. This senator asked the what would happen if you increased taxes to 100%, and the answer was a giant revenue increase, which is silly.

Additionally, though I like the Laffer Curve and agree with it in concept, I do disagree with a key tennet. Even at 100% taxation, there would still be some collection. My example would be slavery. I don’t mean that as a joke, but that’s what 100% taxation looks like. You still get revenue, but the people are slaves. Another example would be a powerful Communist Nation where everyone works for free, but is then provided food and shelter by the government. That’s also 100% taxation. So on a “nit-picky” level I say Arthur Laffer was wrong, you can tax people 100% and continue to get revenue, but that would require a country none of us would call free.

I’ll throw inanother one, it’s a rather fair discussion on the FairTax, somewhat related to the three previous videos. Now I am a very strong supporter of the fairtax and as such I find several things in this video annoying, like when he says it’s a 30% addition to everything. So I’ll clear it up a bit. There are two acceptable ways to look at what percentage of your money is taxed, inclusive and exclusive.

When talking about income taxes, people use the inclusve method. If  the income tax is 25%, and you earn $100, you give the government $25 and keep $75.

When talking about sales taxes, people use the exclusive method. If the sales tax is 33% and you have $100, you can buy something with a price of $75.

So though the 25% income tax has a lower number than the 33% income tax, either way, you have $75 dollars to spend. So yes, in the Fairtax the number seems high, but you have to compare apples to apples. Since you’re replacing the income tax, and that is generally spoken about in inclusive numbers, then you should use inclusive numbers when talking about the FairTax. In which case the tax doesn’t seem so high. (Wow, didn’t mean to write so much.) Anyway, like I said, it’s a pretty fair

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