Paul Krugman, Supply-Side Economist

International Liberty

I’ve been writing about the Laffer Curve for decades, making the simple point that there’s not a linear relationship between tax rates and tax revenue.

To help people understand, I ask them to imagine that they owned a restaurant and decided to double prices. Would they expect twice as much revenue?

Of course not, people respond. Customers would go to other restaurants, or decide to eat at home. Depending on how customers reacted, the restaurant might even wind up with less revenue.

Well, that’s how the Laffer Curve works. When tax rates change, that alters incentives to engage in productive behavior (i.e., how much income they earn). In other words, to figure out tax revenue, you have to look at taxable income in addition to tax rates.

For some odd reason, this is a controversial issue. But it shouldn’t be, because even Paul Krugman agrees about the Laffer Curve.

My…

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About jamesbradfordpate

My name is James Pate. This blog is about my journey. I read books. I watch movies and TV shows. I go to church. I try to find meaning. And, when I can’t do that, I just talk about stuff that I find interesting. I have degrees in fields of religious studies. I have an M.Phil. in the History of Biblical Interpretation from Hebrew Union College in Cincinnati, Ohio. I also have an M.A. in Hebrew Bible from Jewish Theological Seminary, an M.Div. from Harvard Divinity School, and a B.A. from DePauw University.
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