Thursday, April 27, 2017

The 'Laffer Curve' Renamed | Cato Institute

Aside from that odd remark about what some nameless supply-siders like to claim, Mankiw simply restated what real supply-siders really did claim. He emphasized that higher (marginal) tax rates reduce work effort and cause other inefficient distortions. He added that higher tax rates also reduce the size of the tax base — people respond to higher tax rates by taking it easy or figuring out ways to report less taxable income. This used to be called “the Laffer Curve,” but it now goes by the more respectable name of “taxable income elasticity.”I grow weary of people telling me what supply-siders supposedly said, thought or wrote without bothering to actually quote anyone. No economist ever claimed that all taxes are so distortionary that increasing any tax rate would reduce revenue. Art Laffer never said that. Bob Mundell never said that. Larry Lindsey, Larry Kudlow, Craig Roberts, Steve Entin and Bruce Bartlett never said that. I never said that.


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