@dannnynieves - The Rich still pay most of the taxes. Top 25% of wage earners pay 86% of all taxes, top 50% pay 97%, top 10% pay 64%, top 5% pay 53% and the top 1% pay 39%. The bottom 50%? They pay a paltry 3.97%. The top 1% is paying more than ten times in fed taxes than the bottom 50%. The bottom 50% is paying a tiny bit of the taxes, so you can't give them much of a tax cut by definition. Yet these are the people to whom the Democrats claim to want to give tax cuts.
Allow me to introduce myself. I'm most often identified by others as a liberal, watched this to the end, and my head has not exploded. The reason why this has not happened is that the Laffer Curve is nothing more than a circular argument. One commits the fallacy of circular argument when it introduces as its premise the very thing to be proven. In this case, it happens when you take the assumption that a 100 percent tax rate drives revenue to zero because nobody will work. This is nonsense. First of all, it is not even possible to reach 100 percent because a leader must divert some resources, at the very least, to provide the sustenance if a single owner. The closest examples of government reaching absolute taxation (i.e. 100 percent), such as pure feudalism or slave market economy, massive production happens absent any will of the workers. This is only one hole I can poke in the Laffer Curve Hypothesis (in order to be a theory, it must withstand experimentation and pass every test, not just the most favorable).
For instance, the German Nazi's banned Jews from any ownership whatsoever. This is a 100 percent tax rate. As a result, the Germans generated a considerable amount of money, both in the seizing of existing assets and in the use of their labor without anything going to the worker on the pay stub. It happened, and it definitely did not result in zero revenue for the Germans.
David McDonald Classical and Keynesian economic concepts assume a free society. Using the example of Nazi Germany to disprove that a 100% tax rate collects no money is already going outside the constraints of economic theory. If you have a free society, no one will work if the govt takes 100% of their earnings.
Sorry to break your understanding of economics by using examples of economies which make up a substantial number of economies on the planet. First you assert that it is not possible to gain revenue when workers are taxed at a 100-percent rate. I gave a counter-example (which in and of itself is enough to remove the Laffer Curve from the realm of Theory). You say that you're not talking about totalitarian regimes. What you're talking about is a free-market economy that taxes 100 percent, not a totalitarian society. Of course, the defining characteristic of a totalitarian economy is the 100 percent tax rate. So, in other words, there is still no way for you to produce an example where a 100 percent tax rate produces zero tax revenue. The fundamental assumption of the Laffer Curve rests on a principle that works zero percent of the time despite hundreds of examples across thousands of years of civilization.
As a retired person, I want government out of my life. Don't touch my social security or medicare. I never relied on government to make my way. Many young people want to free ride, free health care, and want the rest of us to pay for it! I know what it is like to be poor. I was on food stamps and unemployment but I lifted myself up. No one deserves goverment to come in and save the day. We need Ronold Reagan back!
Is there a way to analyze this theory at different income levels? I'd be really interested to see how this curve would differ if any from an income of 25,50,100,250k+
I would be interested in this analysis, too. The problem is, this is a "Garbage In - Garbage Out" model which does not actually lend itself to meaningful numbers. I explained in a comment above that the theory assumes the shape of a curve and assumes a peak at 30 percent. Furthermore, it is described as a curve on the basis that a 100 percent tax rate produces zero revenue because there is no incentive to work. This is to assume that revenue is the only means of incentivizing labor. There are numerous examples dotting history where workers produce real products despite not sharing in the revenue their work produces. The slave economy of the American South prior to the civil war, the internees of Nazi prison camps, the sentencing of hard-labor within a prison setting are just a few which come to mind. This is pure pseudo-science at its cherry-picked best.
Can someone explain 2 things please: 1. Who decides where point B is? 2. To accept this theory you must also accept that governmental functions are ineffectual is collecting tax efficiently? As you assume that when you raise taxes companies do more to avoid paying them? If taxes went from say 25% to 30% would I suddenly then decide not invest in something?
Biggest problem I have with this model. It has no real numbers. Laffer started out by claiming the new concept of diminishing returns (19th century math), yet does nothing to incorporate any insights of this well-worn field of math into the model. The Laffer Hypothesis is always presented as a specific shape (curve) peaking a specific point (30 percent). The justification for the shape of a curve itself rests upon the completely flawed and utterly circular assumption that a 100 percent tax rate cannot produce revenue. The model is complete trash!
You do NOT need to be an economist to see that, biased or not, this video explains the phenomenon pretty well. As nice as it is to think that the government can raise tax rates without consequence, this is clearly not the case. 100% of zero is still zero. You can ignore this fact only at your peril, as the government does regularly.
cadnewham No one "decides" where point B is; it's a point that can only be determined empirically. To your second question about ineffectual tax collection, it's not a question of the govt not wanting to collect, it's a question of how complicated collecting the tax is and how easily an individual or business can hide the income and avoid taxation (albeit illegally). In terms of how taxes get avoided, think about business that don't accept credit cards. Do you think they really don't want to pay for credit card service, or do you suppose they might be trying to hide income (cash makes it easy to do so)?
Actually, point B cannot be determined empirically, because it hasn't even been formally defined. It's what is called a Fuzzy Model. It describes the behavior of what an equation would look like. However, few people who specialize in Fuzzy Modeling, such as stochastic programmers, would be able to model real-world problems using the information provided. I might be inclined to agree there is almost certainly a point of diminishing returns on tax collections, however calculating a point of diminishing returns is a well-understood mathematical process that is not part of this theory. At best, the Laffer Hypothesis is a very incomplete model. At worst, it is simple fraud. What empiricism has been applied to the results of this doctrine in the American system seems to conclude the exact opposite of what the Laffer Hypothesis seems to suggest.
It could be determined empirically, i.e. by actually ramping tax rates up and down and plotting the resulting revenue; however, it would be impractical and ill-advised to do so given the economic stress you'd be putting your economy under for the sake of simply gathering data. That said, I don't think the point of the Laffer curve is to accurately model revenue generation across tax rates so much as it is a reminder that basis continuous data sets, by definition if 0% and 100% tax rates collect $0 revenue, then there is a maximum, so don't be silly enough to go past that. That's all. That the "Laffer curve" has become this enigma that conservatives use to say tax cuts always pay for themselves and liberals use to bemoan trickle down economics is little more than the red retards and the blue retards misinterpreting the Laffer curve.
@MrWalrus52 No, my question was worded in that manner because you seem to imply a 100 percent tax rate is somehow either in the books for any governing party in the US, or the inevitable result of their policies. I don't know if you're just exaggerating because you somehow believe taxes are too high at the moment, or if you've got any actual proof outside this video (as noted, the curve is up for debate) for your predictions.
Critical thought is important here so put on your thinking cap. What he's explaining is that on different points of the curve you can account for different behaviors from the people who are paying the taxes. At low tax rates, you see an increased willingness to save, invest, etc; therefore, the gov't will collect more taxes in increased financial productivity. The reverse is also true about high taxes.
@MelvinThe42 um no. the point of the video is that tax cuts CAN generate additional revenue, depending on which side of the laffer curve we're on. they do not, by any means, always generate additional revenue.
12FlyMe and PrebateNonsense, you guys are absolutely insane!!! Did you even watch the video? Have you ever seen a breakdown of the proportions of tax revenue by income bracket? And 12flyme, if "workers, self emplyed, and small businesses" dont pay taxes, who will? I'm pretty sure people who are "workers" includes that upper tax bracket that provides an overwhelming amount of tax revenue. You guys are completely nuts, this is another great video from Dan Mitchell and Cato.
@ArcoZakus "How do I know he won't create a company that would hire the first guy?" I don't but that more about have an idea of a company to start up as it would be strange that he wouldn't be able to finance a start up with $150m. Also isn't it more likely that one of the many millions more people who don't earn enough to finance the start up of a company will actually have a creative idea. You don't want to limit the means of job creation to a select few.
This is a concept that has been proven empirically as well as is in EVERY macroeconomics textbook in the country. I doubt that would be unless it is commonly accepted. People will not work at 100% tax. You may have an occasional anomaly but rational people (that is an economics term) will not give up their leisure time without compensation (called opportunity cost). The debate is at what point will further tax increases reduce tax revenue. The Laffer Curve explains this sufficiently.
@evilmiera Not at all. As in calculus when evaluate limits as a number goes to infinity (and division by zero is implied), the fact that infinity is unachievable (and division by zero impossible), the equation and the limits are valid. I do not imply that it is on the books for a 100% tax rate, just a close as practicaity will allow. That is the point of the curve.
@ponycar17 I wasn't asking "When will they?" I was asking when have they? And considering the evidence he's using to support his idea is exaggerated, and a few people seem to claim he's even outright lying about certain statements, I wouldn't go questioning my ability to reason just yet.
Solution to the crisis: * Take payrolls, personal income, and dividends out of the tax base. * Deduct payrolls, personal income, and dividends from the tax base of a value added tax. * Institute a consumption tax with a rate equal to the value added tax (17%). This will: * Encourage greater investment in labor, consumer, and dividend capital * Encourage insourcing * Promote a tax rate lower than FairTax rate * Increase the value of the American workforce * Increase returns on pension funds
The simple curve shown here is self-evident. If there are no taxes, there's no revenue; that's point A. The Soviet Union showed us what happens if government takes everything; incentive to work disappears. That's point C. We know that sound economies produce more tax revenue than that, so we know that point B exists. Voila! the basic shape of the Laffer curve is correct. Peer reviewed research can fill in a lot of detail, but the basic claims are self-evident.
@MrWalrus52 Absolutely. No doubt it's affected by how easy it is to report income as well. If you have to fill out a 100 page form in triplicate, you're not going to want to report anything.
Many people are unwilling to work overtime because they don't want to step into a higher tax bracket, which negatively affects our level of productivity.
@UltraProle21 I understand what you mean now. However, is it really necessary to type "um" ina comment? People use that word when they cannot think of what to say. If you have writer's block, you can just delay typing the comment until you have an idea.
It seems contradictory to assert both that "a flat tax is the way to go" and that "all tax cuts are not created equal." It makes more sense to raise and lower taxes on specific people, places and things in ways that maximize revenue from those specific people, places and things.
I found his list to completely contradict his argument entirely. It begins with the notion that "Tax Reductions do not necessarily pay for themselves" and ends by defining the boundary in the other direction as a 100 percent tax rate because nobody will work (as if revenue is the only motivating factor for production). It also describes a single instance where the principle of diminishing returns is triggered (i.e. hiding assets), yet fails to account mathematically for either diminishing returns or increasing costs.
At the end of the day, just in the same way as a farmer could create a graph regarding milk yield from his dairy herd... and learn how to improve it... we humans are simply regarded as stock by economists and politicians. Just a commodity to be explored. It's just a shame that so much of our tax goes on horrid wars. If only it was invested in helping the people more.
Over all I like the honest description of the Laffer curve, and someone actually admitting that tax cuts don't pay for themselves. I agree with you thought when he brings up a flat tax, that would be the best way to tax the wealthy less and the poor more. Also a great way to destroy the economy. As for government programs creating growth and jobs, Laffer himself even says that government programs are better in rough economic times than tax cuts.
He never suggested at 100% Tax Revenue was 0. Watch the film again. It shows a curve converging towards zero as tax rates get larger. This means that tax revenues will never be exactly zero. Someone some where will do some taxible work no matter how much you tax them or penalize them for it. My problems with it are closer to the neo laffer curve. There is so much going on that can affect tax policty, that this curve is virtually useless to say it exists.
@dannnynieves If I recall correctly (and I do), 1958 is the first year that Congress, not President Eisenhower, voted to remove funds from Social Security and put it into the General Fund for Congress to spend. In America right now we have 150 trillion in unsecured liabilities. Those are your entitlements that we can't afford. If we sold every single thing in America we would get about 50 trillion. It doesn't take a brain surgeon to see were all of this is going. We will soon be Greece.
If you cut taxes and you don't get more revenue overall, that doesn't mean Laffer Curve doesn't work. It just means you weren't in the right spot on the curve.
ScottfromTexas: the econ departments of all universities I know of preach the disproven religion of "Free Trade." Exactly! Just because an economic theory is over 200 years old and is universally accepted among professional economists is no indication it's actually correct.
@bookfreak29 Thanks for your comment and the clarification regarding stock option sales I did not know that. I personally lean against capital gain rates being lower than income tax rates--although the other side has good arguments as well. Mr. Buffet himself actually has some good essays about this. I highly recommend the Collected Essays Of Warren Buffet Edited by Lawrence Cunningham. Your second point--that is exactly what I was trying to say but you said it better. Thanks again.
And there IS a point where income will not be declared if the taxes too high.Say "Bob" owns a small lawnmowing biz and tax rates at 10%. Say while mowing a neighbor asks to cut their lawn too for $30.Bob wants to "do right" and since tax only $3 claims income.Then tax goes up to 20% or $6 tax.Not happy but still claims income.Not worth risking.But what about 50% or $15 tax?Bob now considers NOT claiming - pocketing all $30.What about 80% or $24 tax?At some point a person considers not claiming.
Then how is the quantification of this consideration of not paying taxes accomplished? Does consideration mean he cannot go ahead and claim the tax? If it does not, then you cannot show that a 100 percent tax rate must result in zero tax revenue. If there is a point of diminishing returns, how does the Laffer Curve precisely pinpoint this on a graph? How does this model account for tax evasion as an actuarial risk? Does this plot inevitably land on 30 percent regardless of variances in motivation to work factors? Why is it that, of the six countries with higher GDP per capita than the United States, five of them exceed a 30 percent tax rate (obtained from Tax Revenue as a Percentage of GDP Ratio)? Why don't policies based on the Laffer Curve tend to produce long-term growth?
Right, but because it's a smaller percentageof wages, it's a smaller fraction of the GDP. Therefore the gov't actually has less power relative to the general populace.
@evilmiera Do you think that this presentation, or my comment, was meant to imply that the U.S. tax rate was ever set at 100%? Your question implies disingenuousness or impairment. Please say what you really mean. My comment was that 100% of zero is still zero. I assume the reader to have the modicum of arithmetic reasoning to infer that 99% of a very small number is still a very small number, and so forth. Still with me?
If you enforce it the true viciousness of the relationship kicks in. Taxes are a fascistic aspect of Government. Any tax level above a real rate of 10% is humanly resisted. I go with the humans. It should be written into every constitution in the 21st Century to limit Governments to that Ten percent. Erosion of freedom from that point ought to be assumed. Tax too is the rent you pay to live in that country, so watch out; Marxists might analyse that on the basis of the 'evil rentier class'.
@ArcoZakus "investor has to believe the risk is worth the potential reward" agreed. But a large part of taking on that risk is collateral. So you are still limiting those who can potentially create jobs. Also with your tax creating extra risk; can you see how a low tax for businesses considering breaking even would encourage them but reasonable tax increases wouldn't harm businesses with robust profits.
But a flat rate of tax isn't fair because the value of money to welfare has a logarithmic curve. Example if a guy making just enough to pay rent gets a pay rise that's hugely beneficial to his welfare but if a guy earning $150m (not chosen at random) gets a pay rise that is largely unusable to him. That's why you use tax brackets.
You know Europe and Japan are great examples of Keynesian/socialist economic approach. They have all those services provided to their citizens with high taxes to pay for them. I guess if economic stagnation over the past 30 years is your idea of success, then yes, your ideas make sense. For the rest of us who like to see economic growth, doesn't work so well to punish acquisition of wealth.
i've tried explaining the laffer curve to my dad, who thinks that tax cuts always generate more revenue. i've explained it perfectly, multiple times, but he refuses to learn.
See, when I type your url into Google and the first thing that pops up is "scam", I get suspicious. I guess I'll be unenlightened. The Laffer curve applies to any tax bracket. The premise here is that the maximum revenue generating point is definitely not 100%. The Laffer curve itself is not indicative of any tax or fiscal policy. That you think you can trick millionaires into taking 100% of their income above a certain level is laughable. They will find a friendlier jurisdiction.
@gummoboy69 Reagan was saddled with the horrible economy and Keynesian baggage of the Ford, and Carter disasters. His policies took 2 years to drag the economy out of the tank but it worked. Bush II was doing exactly what Obama is doing now in earnest, and that is following Keynesian theory to its fullest and crippling the country.
The goofiest thing about conservatives who cite the Laffer curve is that it makes absolutely no claim on whether the "optimal" point is above or below our current tax rate. They just come to this irrational conclusion that the optimal point is below our current point. The people who use this rational either possess an immense level of cognitive dissonance or are flat out dishonest.
I already conceded the point on communism. Yes, if you force people to work and don't let them leave, you can have 100% tax rates. Fortunately, the US is not so oppressive, so 100% tax rates would collect no revenue. To the point of your initial post, though, how has supply side economics been proven wrong?
I get that you have a hard-on for traditional economics. My point is that we need to expand our minds to cope with the future. Growth-based economics, as well as this concept of 'rational' actors, is a cold dead horse that people like you are still kicking (that was a metaphor). People are not generally rational, and do not act solely on the basis of tax brackets. Also, just because they print it in every macroeconomics textbook doesn't make it true. The Laffer curve is too simplistic.
@dudz40 "Reagan's" deficit (remember it is the Democrats that controlled both houses of Congress during Reagan's presidency) is not the largest in history. The deficits after WWII are but one example. Unless you intend to be disingenuous and not account for the value of the dollar. Revenue to the treasury increased, but the Democrats spending far exceeded those revenue increases.
free trade is suicidal trade policy? You act as if the trade deficit means anything. Further, even if the trade deficit is meaningful, how do you suppose great taxation of business and people will lead to more productivity and thus lower trade deficit? You have to make the US a friendly place to do business if you want to stop exporting production.
In the end, the reasoning behind massive tax cuts is that it's none of the government's job to confiscate private property in order to perform the vast majority of it's operations (some government functions are obviously necessary. ie police). Any attempt to promote massive tax cuts on the idea that it will in the end increase tax revenues is false, and is inevitably doomed to failure in the end.
@HaulingAsh The loopholes are made for the wealthy and the unions ect ect. On top of collecting more tax money we would eliminate most of the IRS . And they are very expensive. Trust me the rich cringe when they hear of fair tax. When you add more paperwork to business it drives the price up. I guess I'm not saying you're idea is bad I just think we need to go simple and fair (in my opinion). tc :)
We are very clearly to the left hand side of the curve, data from 1940s-now shows this, revenues from income tax v. GDP are on the low end of their range,as are capgains v. gdp and corporate taxes v. gdp.The taxes at the top are where the raise needs to be, as in the top 1% the total federal effective rate starts to drop, so that the top 0.1% pay less (avg. 15-20%) than most true small business owners-- doctors, dentists,lawyers, small plumbing & construction company owners,small store owners.
You seem to move in a number of ways and trying to justify a different point of view.But economics is economics.Economics is the STUDY of how people react.It doesn't tell people HOW to react.That is why Economics is in the Social Sciences department at colleges.BTW, I teach economics so fluent in the subject.That you don't understand economics doesn't mean it doesn't exist.It does.The Laffer Curve is in EVERY textbook in the country.Just because you don't understand it doesn't mean it isn't so.
If you are an instructor, I believe you are using your credentials in an unethical way. A fallacy known as "Appeal to Authority" exists when claims are accepted solely on the opinion of someone who isn't an authority or where scientific consensus doesn't appear to exist. Your argument above is pure academic dogma. You correctly point out that most accredited universities teach Economics within the field of social science rather than within the school of mathematics. This begs the question, should it? You appear ready to confine Economics to the study of how people react. However, this completely ignores the more practical field of Mathematical Economics which seeks to analyze data for application. This aspect is not social science. It is math proper. The results gained from optimization, equilibrium analysis, and stochastic modelling are not descriptive as you claim, but prescriptive as you claim they are not. I invite you to debate me, a lay person, on a topic within your own field of expertise. However, in doing so, you need to be prepared to wrestle with the fundamental assumptions which underlie your training. I happen to think the removal of economics from the more rigorous field of math to the soft science of Social Studies is a travesty in its own right. By the way, I have the same criticism of removing computational linguistics from language arts or acoustics from music as just two instances of the same phenomenon.
High tax rates on the poor dont work, because they just stop working and live off the govt..Laffer curve holds true. For high earners, the bigger issue, as you point out, is their ability to legally evade taxes through legal entities, loopholes, etc. You can tax them all you want, but theyll just find a friendlier jurisdiction for their money..Laffer curve holds true. There's nothing radical about the concept that 0 and 100% tax rates collect $0. Draw your own line in between those 2 points.
If by "modern economics" you mean Keynesian state cronyist shitconomy with its perpetually increasing debt and decreasing value of money madness, sure, yeah, he's the father of that. Supply side economics stupidity. Real economists that realize that the broken window fallacy is a bad basis for economics, understand that John Maynard Keynes was a self-serving moron, and that his policies are disastrous, are laughing their asses of. Real economists being Austrian economists that understand that value does'n not come from the supply side, but from customer choice, and nothing else, and that real money have intrinsic value that can not be created out of thin air. No, the father of modern economics if anything is Chicago School adherent Milton Friedman Still prefer straight up Austrian free markets and freedom of currency.
Well, technically point C is slavery. Also technically the government/owner of the slaves would get all the money, as long as it/he has a way of forcing the slaves to work, which governments are quite capable of doing. :D
If taking 100% of your income is slaver, at which rate is it not slavery? Simple answer: At 0% Taxation is theft, and taxation IS slavery. Same goes from inflation by "money"-printing under legal tender monopolies. Government is nothing but institutionalized crime.
so you want to play semantics as if conservative and libertarian economic philosophy are any different. Fine, libertarian it is. While I would love to argue the irrelevance of the trade deficit/surplus, the more important question is how can you be a mercantilist when at the same time you believe in the govt expanding it's cost base on some type of health care reform? If you want a trade surplus, you have to lower the cost of doing business in the US.
@david510152025303540 I really think we need to remove Government from our businesses as much as possible. However Some large corp. such as Enron (just using them as an example) and others have to have checks and balances I don't think anyone would argue that. I think a fair tax would be the simplest and fairest form (as the name suggests). Tax people on what they purchase. The wealthy buy more and also this kills all the loopholes they enjoy now.
Obviously the dem's and the voters didn't git it. Raising taxes - above our current oppressive rates - will reduce economic well being. Since the top 10 percent of the people already pay 50 percent of the taxes, do the dem's really think they are going to want to work harder to support obama's giveaways. His economic understanding is apparent when he invites the governor of Michigan - she trashed that state - to be on his economic council.
The current problem, which rightwingers in Congress are not understanding, is that we are far to the left on the curve, near point A. We need to raise the rate on the wealthy (raise the top bracket and capital gains rate) to move toward the peak.This is very clear. A misunderstanding inherent in this video is that tax raises always cost jobs.This is false. Tax raises on the wealthy often cause JOBS CREATION,as the wealthy inve$t in DEDUCTIBLE business infrastructure rather than just pay in tax.
It is true that ther was an increase in productivity from 80-now because tax rates were low, but that is primarily because average wages decreased while productive increased. Wh
Center of budget policy asserts that during the reagan years the US debt increase 900 billion to 2.8 trillion, debt per GDP increased from 22% to 38%, GDP growth actually decreased, regulation of the banking industry led to the saving and loans crisis, productivity increased in places such as Mexico and china due to outsourcing while average Americans were unemployed, look no further than what happened to GM.
@dannnynieves - The Rich still pay most of the taxes. Top 25% of wage earners pay 86% of all taxes, top 50% pay 97%, top 10% pay 64%, top 5% pay 53% and the top 1% pay 39%. The bottom 50%? They pay a paltry 3.97%. The top 1% is paying more than ten times in fed taxes than the bottom 50%. The bottom 50% is paying a tiny bit of the taxes, so you can't give them much of a tax cut by definition. Yet these are the people to whom the Democrats claim to want to give tax cuts.
To date, no liberal has been able to watch this entire presentation without his head exploding.
As if "liberals" are the only side of the political aisle that extorts earners.
Both sides are illiberals.
Allow me to introduce myself. I'm most often identified by others as a liberal, watched this to the end, and my head has not exploded. The reason why this has not happened is that the Laffer Curve is nothing more than a circular argument. One commits the fallacy of circular argument when it introduces as its premise the very thing to be proven. In this case, it happens when you take the assumption that a 100 percent tax rate drives revenue to zero because nobody will work. This is nonsense. First of all, it is not even possible to reach 100 percent because a leader must divert some resources, at the very least, to provide the sustenance if a single owner. The closest examples of government reaching absolute taxation (i.e. 100 percent), such as pure feudalism or slave market economy, massive production happens absent any will of the workers. This is only one hole I can poke in the Laffer Curve Hypothesis (in order to be a theory, it must withstand experimentation and pass every test, not just the most favorable).
For instance, the German Nazi's banned Jews from any ownership whatsoever. This is a 100 percent tax rate. As a result, the Germans generated a considerable amount of money, both in the seizing of existing assets and in the use of their labor without anything going to the worker on the pay stub. It happened, and it definitely did not result in zero revenue for the Germans.
David McDonald
Classical and Keynesian economic concepts assume a free society. Using the example of Nazi Germany to disprove that a 100% tax rate collects no money is already going outside the constraints of economic theory. If you have a free society, no one will work if the govt takes 100% of their earnings.
Sorry to break your understanding of economics by using examples of economies which make up a substantial number of economies on the planet. First you assert that it is not possible to gain revenue when workers are taxed at a 100-percent rate. I gave a counter-example (which in and of itself is enough to remove the Laffer Curve from the realm of Theory). You say that you're not talking about totalitarian regimes. What you're talking about is a free-market economy that taxes 100 percent, not a totalitarian society. Of course, the defining characteristic of a totalitarian economy is the 100 percent tax rate. So, in other words, there is still no way for you to produce an example where a 100 percent tax rate produces zero tax revenue. The fundamental assumption of the Laffer Curve rests on a principle that works zero percent of the time despite hundreds of examples across thousands of years of civilization.
Thanks! I have a presentation to do on the Laffer Curve and this helped me a lot as well as my general understanding. Economics to the world!
As a retired person, I want government out of my life. Don't touch my social security or medicare. I never relied on government to make my way. Many young people want to free ride, free health care, and want the rest of us to pay for it! I know what it is like to be poor. I was on food stamps and unemployment but I lifted myself up. No one deserves goverment to come in and save the day. We need Ronold Reagan back!
Is there a way to analyze this theory at different income levels? I'd be really interested to see how this curve would differ if any from an income of 25,50,100,250k+
I would be interested in this analysis, too. The problem is, this is a "Garbage In - Garbage Out" model which does not actually lend itself to meaningful numbers. I explained in a comment above that the theory assumes the shape of a curve and assumes a peak at 30 percent. Furthermore, it is described as a curve on the basis that a 100 percent tax rate produces zero revenue because there is no incentive to work. This is to assume that revenue is the only means of incentivizing labor. There are numerous examples dotting history where workers produce real products despite not sharing in the revenue their work produces. The slave economy of the American South prior to the civil war, the internees of Nazi prison camps, the sentencing of hard-labor within a prison setting are just a few which come to mind. This is pure pseudo-science at its cherry-picked best.
Can someone explain 2 things please:
1. Who decides where point B is?
2. To accept this theory you must also accept that governmental functions are ineffectual is collecting tax efficiently? As you assume that when you raise taxes companies do more to avoid paying them? If taxes went from say 25% to 30% would I suddenly then decide not invest in something?
Biggest problem I have with this model. It has no real numbers. Laffer started out by claiming the new concept of diminishing returns (19th century math), yet does nothing to incorporate any insights of this well-worn field of math into the model. The Laffer Hypothesis is always presented as a specific shape (curve) peaking a specific point (30 percent). The justification for the shape of a curve itself rests upon the completely flawed and utterly circular assumption that a 100 percent tax rate cannot produce revenue. The model is complete trash!
@@SuperDaveOkie Even more, who is to say that the maximum is static as opposed to dynamic?
Regardless of whether one subscribes to the theory, I think we can all agree that there is much room for improvement in our current tax system.
How do you improve cancer?
Answer: You get RID of it.
Great videos, they certainly explain a complex topic in an easy to,understand format.
You do NOT need to be an economist to see that, biased or not, this video explains the phenomenon pretty well. As nice as it is to think that the government can raise tax rates without consequence, this is clearly not the case. 100% of zero is still zero. You can ignore this fact only at your peril, as the government does regularly.
cadnewham No one "decides" where point B is; it's a point that can only be determined empirically. To your second question about ineffectual tax collection, it's not a question of the govt not wanting to collect, it's a question of how complicated collecting the tax is and how easily an individual or business can hide the income and avoid taxation (albeit illegally). In terms of how taxes get avoided, think about business that don't accept credit cards. Do you think they really don't want to pay for credit card service, or do you suppose they might be trying to hide income (cash makes it easy to do so)?
Actually, point B cannot be determined empirically, because it hasn't even been formally defined. It's what is called a Fuzzy Model. It describes the behavior of what an equation would look like. However, few people who specialize in Fuzzy Modeling, such as stochastic programmers, would be able to model real-world problems using the information provided. I might be inclined to agree there is almost certainly a point of diminishing returns on tax collections, however calculating a point of diminishing returns is a well-understood mathematical process that is not part of this theory. At best, the Laffer Hypothesis is a very incomplete model. At worst, it is simple fraud. What empiricism has been applied to the results of this doctrine in the American system seems to conclude the exact opposite of what the Laffer Hypothesis seems to suggest.
It could be determined empirically, i.e. by actually ramping tax rates up and down and plotting the resulting revenue; however, it would be impractical and ill-advised to do so given the economic stress you'd be putting your economy under for the sake of simply gathering data. That said, I don't think the point of the Laffer curve is to accurately model revenue generation across tax rates so much as it is a reminder that basis continuous data sets, by definition if 0% and 100% tax rates collect $0 revenue, then there is a maximum, so don't be silly enough to go past that. That's all. That the "Laffer curve" has become this enigma that conservatives use to say tax cuts always pay for themselves and liberals use to bemoan trickle down economics is little more than the red retards and the blue retards misinterpreting the Laffer curve.
I'll buy that.
@brendos444 Through empirical research; tax rate is not sales tax (which is itself an indirect tax) and means income/business-reporting taxes.
wont taxing to point b be a sign of greater economic activity because there is more revenue?
@MrWalrus52 No, my question was worded in that manner because you seem to imply a 100 percent tax rate is somehow either in the books for any governing party in the US, or the inevitable result of their policies. I don't know if you're just exaggerating because you somehow believe taxes are too high at the moment, or if you've got any actual proof outside this video (as noted, the curve is up for debate) for your predictions.
@MrWalrus52 Mind telling us when the tax rate was set to 100% in the US?
How so? Do you disagree with the concept that govt collects $0 in tax revenue if the tax rate is either 0% or 100%?
Critical thought is important here so put on your thinking cap. What he's explaining is that on different points of the curve you can account for different behaviors from the people who are paying the taxes. At low tax rates, you see an increased willingness to save, invest, etc; therefore, the gov't will collect more taxes in increased financial productivity. The reverse is also true about high taxes.
@MelvinThe42 um no. the point of the video is that tax cuts CAN generate additional revenue, depending on which side of the laffer curve we're on. they do not, by any means, always generate additional revenue.
12FlyMe and PrebateNonsense, you guys are absolutely insane!!! Did you even watch the video? Have you ever seen a breakdown of the proportions of tax revenue by income bracket? And 12flyme, if "workers, self emplyed, and small businesses" dont pay taxes, who will? I'm pretty sure people who are "workers" includes that upper tax bracket that provides an overwhelming amount of tax revenue. You guys are completely nuts, this is another great video from Dan Mitchell and Cato.
@ArcoZakus "How do I know he won't create a company that would hire the first guy?" I don't but that more about have an idea of a company to start up as it would be strange that he wouldn't be able to finance a start up with $150m. Also isn't it more likely that one of the many millions more people who don't earn enough to finance the start up of a company will actually have a creative idea. You don't want to limit the means of job creation to a select few.
This is a concept that has been proven empirically as well as is in EVERY macroeconomics textbook in the country. I doubt that would be unless it is commonly accepted.
People will not work at 100% tax. You may have an occasional anomaly but rational people (that is an economics term) will not give up their leisure time without compensation (called opportunity cost). The debate is at what point will further tax increases reduce tax revenue. The Laffer Curve explains this sufficiently.
@evilmiera Not at all. As in calculus when evaluate limits as a number goes to infinity (and division by zero is implied), the fact that infinity is unachievable (and division by zero impossible), the equation and the limits are valid. I do not imply that it is on the books for a 100% tax rate, just a close as practicaity will allow. That is the point of the curve.
@ponycar17 I wasn't asking "When will they?" I was asking when have they? And considering the evidence he's using to support his idea is exaggerated, and a few people seem to claim he's even outright lying about certain statements, I wouldn't go questioning my ability to reason just yet.
Excellent primer on the Laffer Curve!
Solution to the crisis:
* Take payrolls, personal income, and dividends out of the tax base.
* Deduct payrolls, personal income, and dividends from the tax base of a value added tax.
* Institute a consumption tax with a rate equal to the value added tax (17%).
This will:
* Encourage greater investment in labor, consumer, and dividend capital
* Encourage insourcing
* Promote a tax rate lower than FairTax rate
* Increase the value of the American workforce
* Increase returns on pension funds
The simple curve shown here is self-evident. If there are no taxes, there's no revenue; that's point A. The Soviet Union showed us what happens if government takes everything; incentive to work disappears. That's point C. We know that sound economies produce more tax revenue than that, so we know that point B exists. Voila! the basic shape of the Laffer curve is correct.
Peer reviewed research can fill in a lot of detail, but the basic claims are self-evident.
See part II. There is gives specific examples.
@MrWalrus52
Absolutely. No doubt it's affected by how easy it is to report income as well. If you have to fill out a 100 page form in triplicate, you're not going to want to report anything.
Many people are unwilling to work overtime because they don't want to step into a higher tax bracket, which negatively affects our level of productivity.
very very well taught. this is the way all macro should be
@UltraProle21 I understand what you mean now. However, is it really necessary to type "um" ina comment? People use that word when they cannot think of what to say. If you have writer's block, you can just delay typing the comment until you have an idea.
It seems contradictory to assert both that "a flat tax is the way to go" and that "all tax cuts are not created equal." It makes more sense to raise and lower taxes on specific people, places and things in ways that maximize revenue from those specific people, places and things.
I found his list to completely contradict his argument entirely. It begins with the notion that "Tax Reductions do not necessarily pay for themselves" and ends by defining the boundary in the other direction as a 100 percent tax rate because nobody will work (as if revenue is the only motivating factor for production). It also describes a single instance where the principle of diminishing returns is triggered (i.e. hiding assets), yet fails to account mathematically for either diminishing returns or increasing costs.
Hey layed a foundation of hypothesis to be tested and proved wrong. That was a good contribution.
At the end of the day, just in the same way as a farmer could create a graph regarding milk yield from his dairy herd... and learn how to improve it... we humans are simply regarded as stock by economists and politicians. Just a commodity to be explored. It's just a shame that so much of our tax goes on horrid wars. If only it was invested in helping the people more.
Over all I like the honest description of the Laffer curve, and someone actually admitting that tax cuts don't pay for themselves. I agree with you thought when he brings up a flat tax, that would be the best way to tax the wealthy less and the poor more. Also a great way to destroy the economy. As for government programs creating growth and jobs, Laffer himself even says that government programs are better in rough economic times than tax cuts.
You just earned the educational 100% tax rate
He never suggested at 100% Tax Revenue was 0. Watch the film again. It shows a curve converging towards zero as tax rates get larger.
This means that tax revenues will never be exactly zero. Someone some where will do some taxible work no matter how much you tax them or penalize them for it.
My problems with it are closer to the neo laffer curve. There is so much going on that can affect tax policty, that this curve is virtually useless to say it exists.
@dannnynieves If I recall correctly (and I do), 1958 is the first year that Congress, not President Eisenhower, voted to remove funds from Social Security and put it into the General Fund for Congress to spend. In America right now we have 150 trillion in unsecured liabilities. Those are your entitlements that we can't afford. If we sold every single thing in America we would get about 50 trillion. It doesn't take a brain surgeon to see were all of this is going. We will soon be Greece.
If you cut taxes and you don't get more revenue overall, that doesn't mean Laffer Curve doesn't work. It just means you weren't in the right spot on the curve.
ScottfromTexas: the econ departments of all universities I know of preach the disproven religion of "Free Trade."
Exactly! Just because an economic theory is over 200 years old and is universally accepted among professional economists is no indication it's actually correct.
@bookfreak29 Thanks for your comment and the clarification regarding stock option sales I did not know that. I personally lean against capital gain rates being lower than income tax rates--although the other side has good arguments as well. Mr. Buffet himself actually has some good essays about this. I highly recommend the Collected Essays Of Warren Buffet Edited by Lawrence Cunningham. Your second point--that is exactly what I was trying to say but you said it better. Thanks again.
And there IS a point where income will not be declared if the taxes too high.Say "Bob" owns a small lawnmowing biz and tax rates at 10%. Say while mowing a neighbor asks to cut their lawn too for $30.Bob wants to "do right" and since tax only $3 claims income.Then tax goes up to 20% or $6 tax.Not happy but still claims income.Not worth risking.But what about 50% or $15 tax?Bob now considers NOT claiming - pocketing all $30.What about 80% or $24 tax?At some point a person considers not claiming.
Then how is the quantification of this consideration of not paying taxes accomplished? Does consideration mean he cannot go ahead and claim the tax? If it does not, then you cannot show that a 100 percent tax rate must result in zero tax revenue. If there is a point of diminishing returns, how does the Laffer Curve precisely pinpoint this on a graph? How does this model account for tax evasion as an actuarial risk? Does this plot inevitably land on 30 percent regardless of variances in motivation to work factors? Why is it that, of the six countries with higher GDP per capita than the United States, five of them exceed a 30 percent tax rate (obtained from Tax Revenue as a Percentage of GDP Ratio)? Why don't policies based on the Laffer Curve tend to produce long-term growth?
the question is, will it blend?
Right, but because it's a smaller percentageof wages, it's a smaller fraction of the GDP. Therefore the gov't actually has less power relative to the general populace.
@evilmiera Do you think that this presentation, or my comment, was meant to imply that the U.S. tax rate was ever set at 100%? Your question implies disingenuousness or impairment. Please say what you really mean. My comment was that 100% of zero is still zero. I assume the reader to have the modicum of arithmetic reasoning to infer that 99% of a very small number is still a very small number, and so forth. Still with me?
@UltraProle21 Why are you trying to explain the curve to him if he already thinks tax cuts generate revenue?
@UltraProle21 Did you even watch the video? The point of the curve is that tax cuts generate revenue.
That this curve exists seems mathematically indisputable to me. The actual shape of the curve, the maxima in particular, is up for debate.
If you enforce it the true viciousness of the relationship kicks in. Taxes are a fascistic aspect of Government. Any tax level above a real rate of 10% is humanly resisted. I go with the humans. It should be written into every constitution in the 21st Century to limit Governments to that Ten percent. Erosion of freedom from that point ought to be assumed. Tax too is the rent you pay to live in that country, so watch out; Marxists might analyse that on the basis of the 'evil rentier class'.
i agree with you,
maybe at that point (Downward slope) people are too unhappy and start to complain
2:26 scared the shit outta me
@ArcoZakus "investor has to believe the risk is worth the potential reward" agreed. But a large part of taking on that risk is collateral. So you are still limiting those who can potentially create jobs. Also with your tax creating extra risk; can you see how a low tax for businesses considering breaking even would encourage them but reasonable tax increases wouldn't harm businesses with robust profits.
But a flat rate of tax isn't fair because the value of money to welfare has a logarithmic curve. Example if a guy making just enough to pay rent gets a pay rise that's hugely beneficial to his welfare but if a guy earning $150m (not chosen at random) gets a pay rise that is largely unusable to him. That's why you use tax brackets.
You know Europe and Japan are great examples of Keynesian/socialist economic approach. They have all those services provided to their citizens with high taxes to pay for them. I guess if economic stagnation over the past 30 years is your idea of success, then yes, your ideas make sense. For the rest of us who like to see economic growth, doesn't work so well to punish acquisition of wealth.
thanks .. that was helpful to understand!
My statistics professer laughed his ass off when he saw this.
Why, please explain......🧐
70% is appalling, but the tax rate was actually 90% before Kennedy became president.
i've tried explaining the laffer curve to my dad, who thinks that tax cuts always generate more revenue. i've explained it perfectly, multiple times, but he refuses to learn.
See, when I type your url into Google and the first thing that pops up is "scam", I get suspicious. I guess I'll be unenlightened.
The Laffer curve applies to any tax bracket. The premise here is that the maximum revenue generating point is definitely not 100%. The Laffer curve itself is not indicative of any tax or fiscal policy.
That you think you can trick millionaires into taking 100% of their income above a certain level is laughable. They will find a friendlier jurisdiction.
But what if that pie is significantly bigger than it was in 1980? Further, why must we dictate the distribution of wealth?
I'll turn this on again the next time I have trouble sleeping.
@gummoboy69
Reagan was saddled with the horrible economy and Keynesian baggage of the Ford, and Carter disasters. His policies took 2 years to drag the economy out of the tank but it worked.
Bush II was doing exactly what Obama is doing now in earnest, and that is following Keynesian theory to its fullest and crippling the country.
Thank you sir
The goofiest thing about conservatives who cite the Laffer curve is that it makes absolutely no claim on whether the "optimal" point is above or below our current tax rate. They just come to this irrational conclusion that the optimal point is below our current point. The people who use this rational either possess an immense level of cognitive dissonance or are flat out dishonest.
@MelvinThe42 i was using it to express a sort of sarcastic attitude. e.g. if someone says "liberal policies help the poor", i would say "um no."
I already conceded the point on communism. Yes, if you force people to work and don't let them leave, you can have 100% tax rates. Fortunately, the US is not so oppressive, so 100% tax rates would collect no revenue.
To the point of your initial post, though, how has supply side economics been proven wrong?
Tax revenues INCREASED EVERY YEAR during Reagan. It's the spending stupid.
I get that you have a hard-on for traditional economics. My point is that we need to expand our minds to cope with the future. Growth-based economics, as well as this concept of 'rational' actors, is a cold dead horse that people like you are still kicking (that was a metaphor). People are not generally rational, and do not act solely on the basis of tax brackets. Also, just because they print it in every macroeconomics textbook doesn't make it true.
The Laffer curve is too simplistic.
Are you accusing universities of being a hotbed for conservative economic thought? What college(s) are you talking about exactly? Brigham Young??
@dudz40 "Reagan's" deficit (remember it is the Democrats that controlled both houses of Congress during Reagan's presidency) is not the largest in history. The deficits after WWII are but one example. Unless you intend to be disingenuous and not account for the value of the dollar. Revenue to the treasury increased, but the Democrats spending far exceeded those revenue increases.
free trade is suicidal trade policy? You act as if the trade deficit means anything. Further, even if the trade deficit is meaningful, how do you suppose great taxation of business and people will lead to more productivity and thus lower trade deficit? You have to make the US a friendly place to do business if you want to stop exporting production.
In the end, the reasoning behind massive tax cuts is that it's none of the government's job to confiscate private property in order to perform the vast majority of it's operations (some government functions are obviously necessary. ie police). Any attempt to promote massive tax cuts on the idea that it will in the end increase tax revenues is false, and is inevitably doomed to failure in the end.
My son got a b on this lol 😂
@HaulingAsh The loopholes are made for the wealthy and the unions ect ect. On top of collecting more tax money we would eliminate most of the IRS . And they are very expensive. Trust me the rich cringe when they hear of fair tax. When you add more paperwork to business it drives the price up. I guess I'm not saying you're idea is bad I just think we need to go simple and fair (in my opinion). tc :)
We are very clearly to the left hand side of the curve, data from 1940s-now shows this, revenues from income tax v. GDP are on the low end of their range,as are capgains v. gdp and corporate taxes v. gdp.The taxes at the top are where the raise needs to be, as in the top 1% the total federal effective rate starts to drop, so that the top 0.1% pay less (avg. 15-20%) than most true small business owners-- doctors, dentists,lawyers, small plumbing & construction company owners,small store owners.
You seem to move in a number of ways and trying to justify a different point of view.But economics is economics.Economics is the STUDY of how people react.It doesn't tell people HOW to react.That is why Economics is in the Social Sciences department at colleges.BTW, I teach economics so fluent in the subject.That you don't understand economics doesn't mean it doesn't exist.It does.The Laffer Curve is in EVERY textbook in the country.Just because you don't understand it doesn't mean it isn't so.
If you are an instructor, I believe you are using your credentials in an unethical way. A fallacy known as "Appeal to Authority" exists when claims are accepted solely on the opinion of someone who isn't an authority or where scientific consensus doesn't appear to exist. Your argument above is pure academic dogma. You correctly point out that most accredited universities teach Economics within the field of social science rather than within the school of mathematics. This begs the question, should it? You appear ready to confine Economics to the study of how people react. However, this completely ignores the more practical field of Mathematical Economics which seeks to analyze data for application. This aspect is not social science. It is math proper. The results gained from optimization, equilibrium analysis, and stochastic modelling are not descriptive as you claim, but prescriptive as you claim they are not. I invite you to debate me, a lay person, on a topic within your own field of expertise. However, in doing so, you need to be prepared to wrestle with the fundamental assumptions which underlie your training. I happen to think the removal of economics from the more rigorous field of math to the soft science of Social Studies is a travesty in its own right. By the way, I have the same criticism of removing computational linguistics from language arts or acoustics from music as just two instances of the same phenomenon.
High tax rates on the poor dont work, because they just stop working and live off the govt..Laffer curve holds true. For high earners, the bigger issue, as you point out, is their ability to legally evade taxes through legal entities, loopholes, etc. You can tax them all you want, but theyll just find a friendlier jurisdiction for their money..Laffer curve holds true. There's nothing radical about the concept that 0 and 100% tax rates collect $0. Draw your own line in between those 2 points.
Keynes is the father of modern economics. You know wrote much of the economic policy of the new deal? FDR copied it mostly off of keyenes.
If by "modern economics" you mean Keynesian state cronyist shitconomy with its perpetually increasing debt and decreasing value of money madness, sure, yeah, he's the father of that.
Supply side economics stupidity. Real economists that realize that the broken window fallacy is a bad basis for economics, understand that John Maynard Keynes was a self-serving moron, and that his policies are disastrous, are laughing their asses of. Real economists being Austrian economists that understand that value does'n not come from the supply side, but from customer choice, and nothing else, and that real money have intrinsic value that can not be created out of thin air.
No, the father of modern economics if anything is Chicago School adherent Milton Friedman
Still prefer straight up Austrian free markets and freedom of currency.
"The Laughter Curve".
O yes you are!
Well, technically point C is slavery. Also technically the government/owner of the slaves would get all the money, as long as it/he has a way of forcing the slaves to work, which governments are quite capable of doing. :D
I see I'm late to the game on this one. Well done!
I see you are on a roll. :D Good to know I am not the only one who disagrees with this stupid "theory".
If taking 100% of your income is slaver, at which rate is it not slavery?
Simple answer:
At 0%
Taxation is theft, and taxation IS slavery.
Same goes from inflation by "money"-printing under legal tender monopolies.
Government is nothing but institutionalized crime.
We should eliminate limited liability so shareholders can be sued? Who would buy stock?
@UltraProle21 Oh, I know that is the reason.
Enforcement was probably looser as well. Accounting was less developed. Swiss banking secret was stronger.
so you want to play semantics as if conservative and libertarian economic philosophy are any different. Fine, libertarian it is.
While I would love to argue the irrelevance of the trade deficit/surplus, the more important question is how can you be a mercantilist when at the same time you believe in the govt expanding it's cost base on some type of health care reform? If you want a trade surplus, you have to lower the cost of doing business in the US.
@david510152025303540 I really think we need to remove Government from our businesses as much as possible. However Some large corp. such as Enron (just using them as an example) and others have to have checks and balances I don't think anyone would argue that. I think a fair tax would be the simplest and fairest form (as the name suggests). Tax people on what they purchase. The wealthy buy more and also this kills all the loopholes they enjoy now.
@beetjuice In what way?
...like you can't just apply it to all income
The LAST thing you want to do is increase government revenue!
As Lady Gaga said: Are you listening???
Productivity has increased due to technology.
@MelvinThe42 because he thinks they always generate more revenue, which is ridiculous, as the video, and logic, point out.
"claim tax policy has no impact on economic performance"
who the fuck actually claims this
The same type of people in this comment section who seem to think that at a 100% tax rate, the government will still make revenue from taxes.
Major error. We bought this hook, line, and sinker in 1980 and you can see where it got us.
Obviously the dem's and the voters didn't git it. Raising taxes - above our current oppressive rates - will reduce economic well being. Since the top 10 percent of the people already pay 50 percent of the taxes, do the dem's really think they are going to want to work harder to support obama's giveaways. His economic understanding is apparent when he invites the governor of Michigan - she trashed that state - to be on his economic council.
@megarational yes and yes lol
This belongs in the same category as Reefer Madness.
The current problem, which rightwingers in Congress are not understanding, is that we are far to the left on the curve, near point A. We need to raise the rate on the wealthy (raise the top bracket and capital gains rate) to move toward the peak.This is very clear.
A misunderstanding inherent in this video is that tax raises always cost jobs.This is false. Tax raises on the wealthy often cause JOBS CREATION,as the wealthy inve$t in DEDUCTIBLE business infrastructure rather than just pay in tax.
*herman cain voice* NAHN NAHN NAHN!
It is true that ther was an increase in productivity from 80-now because tax rates were low, but that is primarily because average wages decreased while productive increased. Wh
Center of budget policy asserts that during the reagan years the US debt increase 900 billion to 2.8 trillion, debt per GDP increased from 22% to 38%, GDP growth actually decreased, regulation of the banking industry led to the saving and loans crisis, productivity increased in places such as Mexico and china due to outsourcing while average Americans were unemployed, look no further than what happened to GM.