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Tags: taxes | consequences | history | economy | supply side

Taxes Have Consequences, Notwithstanding Laffer Curve Denialism

business concept meaning Laffer Curve with phrase on the sheet
(Yurii Kibalnik/Dreamstime.com)

Ralph Benko By Wednesday, 28 September 2022 11:33 AM EDT Current | Bio | Archive

In his foreword to "Taxes Have Consequences: An Income Tax History of the United States," former President Donald Trump writes: "How's that for an egg in your beer?"

Trump recites seven documented prosperity-inducing benefits of his tax cuts, concluding, "The sum total of my tax bill was win-win-win for everyone."

Made me nostalgic. I hadn't heard that old WWII idiom "an egg in your beer" since my beloved father, Max, like Donald Trump, a Queens, N.Y., boy, passed on to the Great Beyond.

That a former U.S. president lends his prestige shows the consequentiality of this work by Arthur Laffer, Brian Domitrovic and Jeanne Cairns Sinquefield. Remember, Trump invested Dr. Laffer with the Presidential Medal of Freedom, proclaiming: "Few people in history have revolutionized economic thought and policy like Dr. Art Laffer.

"He developed a brilliant theory, shaped unprecedented economic reforms, and helped turn a severe recession into a remarkable boom. He proved that the most powerful way to grow the economy and raise government revenue was not to increase tax rates, but to adopt strong incentives that unleash the power of human freedom and innovate, create jobs, and deliver greater opportunity to all Americans. And he's proved it over and over again."

Now comes Dr. Laffer with two distinguished colleagues, Dr. Domitrovic and Dr. Cairns Sinquefield, to prove it all over again with "Taxes Have Consequences: An Income Tax History of the United States," the first "definitive history of the effect of the income tax on the economy."

It makes the definitive case against confiscatory tax rates as counterproductive to equitable prosperity and damaging to government tax revenues.

Common sense. Yet as the book's epigram states, "the [tax] law has close to its heart something very like a lie: that is, it provides for taxing incomes at steeply progressive rates, and then goes on to provide an array of escape hatches so convenient that hardly anyone, no matter how rich, need pay the top rates or anything like them."

Much of the political class (the recipient of tax money) remains complicit in the lie. Laffer Curve denialism flies in the face of history and, driving capital out of its most productive uses, impoverishes all.

Can a book change policy and, thus, history? Indeed yes! During the 1980s there was a dangerous free-floating meme: "No nation ever taxed itself to death."

Back then, I, then the Littlest Supply Sider®, came across a battered edition of a vanity press coffee table book "Fight, Flight, Fraud, the Story of Taxation," a compendium of stories of nations that had, indeed, crippled themselves with bad taxes.

I contacted the author, Charles Adams, who coaxed me to act as his agent and publicist in getting it published for real. Madison books brought out For Good and Evil: The Impact of Taxes on the Course of Civilization (which the author inscribed to me: "Without your support and enthusiasm this would not be. With gratitude ...).

My relentless promotion provided extensive exposure to "For Good and Evil," helping to drive it to bestseller status. Its publication and attendant publicity drove a wooden stake through the heart of the nonsensical claim that no nation had ever taxed itself to death.

Yet history, as Karl Marx citing Georg Wilhelm Friedrich Hegel observed, repeats itself, "the first time as tragedy, the second time as farce." "Taxes Have Consequences" is needed to avert a regression toward the mean by a mean political-academic complex. Indeed, there are now stirrings of advocacy for raising tax rates, again, to nosebleed levels.

Laffer, Domitrovic and Sinquefield here provide the antidote to farce. Let's hope that some national benefactor delivers a copy (or two) to every member of Congress (as I, with a critical assist from the young Peter Roff, did with "For Good and Evil").

"Taxes Have Consequences" begins with the 16th Amendment creation of the income tax; inventories the history of tax rates (and their real world impact); considers tax avoidance; reveals how the Laffer Curve indeed is Alive and Well;" takes a deep dive to the "Tax Cuts of the Roaring 1920s," explore how taxes contributed to the Great Depression; demolishes the myth of how WWII ended the Great Depression in "World War II and the Economy" and delves into post-WWII prosperity.

It exposes high tax rates and the sluggish 1950s; reveals what powered the growth takeoff of the 1960s, checks into the states after WWII; Taxes and Stagflation; the Great Boom, 1982-2000; Sluggishness in the 2000s; the Trump Tax Cut, ultimately summarizing its findings in an elegantly brief conclusion.

Thanks to Drs. Laffer, Domitrovic and Sinquefield, we few remaining happy equitable prosperity warriors, once known as the Supply Siders, are better equipped to stymie those Big Government predators, both Donks and Pachyderms, forever lusting to raise marginal tax rates.

As Dr. Laffer inscribed the copy I reviewed, "If Reagan and Kennedy could do it so can we."

Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply-Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $94T. Read Ralph Benko's reports — More Here.

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Laffer Curve denialism flies in the face of history and, driving capital out of its most productive uses, impoverishes all.
taxes, consequences, history, economy, supply side
Wednesday, 28 September 2022 11:33 AM
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