President Barack Obama has it all wrong in his effort to raise taxes for the rich while maintaining Bush-era tax cuts for the poor and middle class, says star economist Arthur Laffer.
The man who counseled President Ronald Reagan on lowering taxes says doing so for the wealthy generates increased economic activity.
“It’s not tax cuts that pay for themselves,” he told Bloomberg.
“Tax cuts on the poor cost you lots of money. Tax cuts on the rich pay for themselves. Rich people can afford lawyers, accountants, and can defer income.”
The rich also can afford to invest their money in ways that will aid the economy, he says.
Yet the Obama administration has proposed raising taxes on people whose income totals more than $200,000, with the top rate rising to 39.6 percent from 35 percent currently.
“They are wrong,” Laffer said.
“It doesn’t work that way. The rich can change the volume, timing, composition and location of their income. Poor people can’t.”
One rich person, billionaire private equity specialist Wilbur Ross, takes issue with Laffer.
Ross supports higher taxes for top earners, as long as the government spends the money wisely.
"I think that's OK, as long as they do something useful," he said on "The Charlie Rose Show."
Ross also supports leaving tax cuts in place for the non-wealthy.
"If you want to do something to destroy consumer spending, just eat away at the middle class," he said.
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