Arthur Laffer

Economist

1940-08-14

American economist known for contributions to supply-side economics and for the Laffer Curve, which models relationships between tax rates and tax revenue. He has advised political leaders and policy institutions on fiscal and economic strategy. His work has been influential in U.S. tax policy debates.

Quotes by Arthur Laffer

What you do by having an income tax rate reduction across the board, you really provide great incentives for people to work, produce, and increase output. So I would support a carbon tax in replacement for a progressive income tax.
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Sometimes, tax rate increases create the very problems that the spending is intended to cure. In other words, the tax rate increases reduce economic growth; they shrink the pie; they cause more poverty, more despair, more unemployment, which are all things government is trying to alleviate with spending.
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It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.
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In 2010 the U.S. will have a payroll tax rate increase, an estate tax increase, and income tax increases. There's also a tax increase coming in 2010 on carried interest. This rate will rise from its current level of 15 percent to 35 percent, and then it will rise again in 2011.
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Tax rates aren't everything with regard to incentives to work. I would probably work at a 100% tax rate next to a nude modeling studio. I'm joking, but you know what I'm saying. There's a lot more to it than just tax rates. It's economics that I do; I don't do nude modeling studio economics. People do respond to taxes.
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The Laffer Curve illustrates the basic idea that changes in tax rates have two effects on tax revenues: the arithmetic effect and the economic effect.
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And you can't have a prosperous economy when the government is way overspending, raising tax rates, printing too much money, over regulating and restricting free trade. It just can't be done.
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The linkage between tax rates and public services is, if not non-existent, negative.
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Government spending is taxation. When you look at this, I've never heard of a poor person spending himself into prosperity; let alone I've never heard of a poor person taxing himself into prosperity.
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California is the highest-tax state in the nation and has been for a long time. It has the highest-paid teachers in the nation, by far - $400 a month more than New Jersey - and yet California is the third lowest state on test scores for fourth and eighth grade English and math in the nation, and has been at the low level for a long, long time.
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The trade deficit is the capital surplus and don't ever think of having a capital surplus as being a bad thing for our country.
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I used the so-called Laffer Curve all the time in my classes and with anyone else who would listen to me to illustrate the trade-off between tax rates and tax revenues.
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When you look at the government, when the government collects a buck, it's not free. They have to spend resources, the IRS, audits, all this sort of crap, to collect the dollar. I'm not assuming any Laffer curve effect here at all. There are just transactions costs of collecting that money.
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What I'm not saying is that all government spending is bad. It's not - far, far from it, but there is no free lunch, as a former colleague of mine used to say. There is no public tooth fairy. Father Christmas does not work on the Treasury staff this year. You can never bail someone out of trouble without putting someone else into trouble.
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Let me just try to give you sort of the intuitive one here on the stimulus funds. If you have a two-person economy - let's imagine we have two farms, and that's the whole world, just two farms. If one of those farmers gets unemployment benefits, who do you think pays for him? Am I going way over your heads today?
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You know, without China there is no Wal-Mart and without Wal-Mart there is no middle class and lower class prosperity in the United States.
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Because tax cuts create an incentive to increase output, employment, and production, they also help balance the budget by reducing means-tested government expenditures. A faster-growing economy means lower unemployment and higher incomes, resulting in reduced unemployment benefits and other social welfare programs.
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We are having the single worst recovery the U.S. has had since the Great Depression. I don't care how you measure it. The East Coast knows it. The West Coast knows it. North, South, old, young, everyone knows it's the worst recovery since the Great Depression.
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When you look at the world, everyone in the world who cares about his or her family wants to have a major portion of their assets in the United States because we are the growth country and the freedom loving country.
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