Pay 16 Taxes


Modified from 16 tons

Some people say a man is made outta mud
Teaparty man’s made from trials and blood
Trials and blood and skin and bones
A wallet that’s a-weak and a mind that’s strong

You pay sixteen taxes, what do you get
Another day older, trillion deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the government dole
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Thoughts on the Laffer Curve


I am not an economist, so feel free to take these comments with a grain or two of salt. But I have a background in physics, and think I have a good enough grasp of calculus to make some observations about a graph.

Description

NotLaffer

Laffer curve is a qualitative description of government revenues as a function of tax rates. Wikipedia suggests that there are some sophisticated economists that doubt its existence. I, being less sophisticated, regard it as self evident. At zero tax rates, the revenues would be nearly zero – except for tariffs (which are taxes on trade) and legal fines and maybe some other fees (taxes) such as liquor stamps.  100% tax rates result in essentially a slave state or barter society.  Revenues would also be low as there in no incentive to generate an income.  Citizens are completely dependent on government for basic needs.  In between revenues will be higher, and there will be [at least] one maximum. Laffer skirts the issue of the maximum, noting that reducing taxes reduces income less than expected, and presumably, raising taxes produces less income.  Since there is no quantitative formulation of the Laffer Curve, any conclusions can only be qualitative. Continue reading