You Can’t Soak the Rich or Laffer Revisited

I’m a longtime believer in the truth of the Laffer Curve. Here’s an updated angle on it.

You Can’t Soak the Rich – WSJ.com: “What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser’s Law says it will also lower tax revenue. That’s a highly inconvenient truth for redistributive tax policy, and it flies in the face of deeply felt beliefs about social justice. It would surely be unpopular today with those presidential candidates who plan to raise tax rates on the rich – if they knew about it.

Although Hauser’s Law sounds like a restatement of the Laffer Curve (and Mr. Hauser did cite Arthur Laffer in his original article), it has independent validity. Because Mr. Laffer’s curve is a theoretical insight, theoreticians find it easy to quibble with. Test cases, where the economy responds to a tax change, always lend themselves to many alternative explanations. Conventional economists, despite immense publicity, have yet to swallow the Laffer Curve. When it is mentioned at all by critics, it is often as an object of scorn.”

  • Sam

    Many that want to raise the taxes that I have spoken to want to raise taxes on the rich because they are bitter. The liberals I talk to are usually bitter at the fact that someone is better off than they are, and they want to punish the rich and drag them down. I swear it’s a mental illness.