Evidence Supporting The Laffer Curve

Part 1 talked more about theory than real life examples.  Part 2 will now get into the evidence supporting the theory behind the Laffer Curve.

My guess is that many small business owners already understand the fact that if you tax something you get less of that thing.  People change their behaviors in response to the tax scheme’s that politicians pass into law.  Part 3, which I will post tomorrow, will discuss this fact by examining dynamic and static scoring.  This is also known as dynamic and static economic analysis.

Explanation of the Laffer Curve

Most politicians and bureaucrats love the idea of raising taxes on you and I because in their eyes it raises more money for them to spend, or does it?  This is the first of a three part series that explains the theory behind the “Laffer Curve” named after Dr. Arthur Laffer, who is an economist.

Once you complete watching the three part series you will begin to understand that the current tax policy, or should I say scheme, is more about redistribution of wealth than maximizing tax revenues to the treasury.  One of the things our civil servants never seem to learn is the fact that their policies and laws change peoples behavior and Dr. Laffer has done a top notch job demonstrating this fact.

Tax Scheme is Changing Behavior

Many of you that are small business owners have expressed to me over the past several months the uphill battle you are facing.  Tightening lines of credit along with increasing fees, regulations, and taxes at all levels.  All of these things summed together are having a negative impact on economic productivity.  Many of you are sending more money to the state and federal coffers instead of using that money to purchase more inventory or hire additional employees.  The politicians and tax authorities are so desperate for money that they seem to be willing to kill the goose that lays the golden eggs.

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