Arthur Laffer, extremely rich person, fondly remembers the Reagan era and predicts economic collapse after the Bush tax cuts expire in 2010. Flickr photo.
Arthur Laffer is making news by predicting that the U.S. economy will collapse next year when George W. Bush tax cuts expire in 2010. His theory on the Obama tax plan is based on how the super-rich can choose when and how they collect their income to evade taxes. Laffer believes the economy is doing better this year than it should because these aristocrats are collecting more of their loot and spending more of their money before taxes rise. He says that when taxes go up, Americans who can will choose to make less money, thus reducing the government’s tax revenue anyway.
Bush tax cuts expire 2010
Arthur Laffer became famous when he influenced the Reagan administration to cut taxes. His Laffer Curve regarding taxes appears in economic textbooks. Laffer, in his Wall Street Journal column, said that Reagan tax cuts brought the economy out of what was the worst U.S. recession since the Depression — until the Mt. Everest recession we’re still trying to get out of now made that one look like a speed bump. He said when tax cuts went into effect on Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5 percent in 1983 and 5.5 percent in 1984. He doesn’t mention how Bush tax cuts in 2001 and 2003 in the face of two wars eventually ran the U.S. economy into the ground and destroyed a budget surplus he inherited from Bill Clinton.
The Arthur Laffer curveball
The Laffer Curve tax cut argument misleads his readers, according to Asha Bangalore at Northern Trust. As another recession set in after Laffer’s utopic Reaganonomic era, Bangalore wonders why the economy posted substantial growth after tax increases were implemented by Bill Clinton in 1993. A revival of bank lending after the Reagan hangover led to self-sustained growth despite the tax increases. Bangalore also points out that if the Laffer Curve theory about tax cuts is valid, the U.S. economy would have done better than record the weakest period of economic expansion in history following the Bush tax cuts of 2001 and 2003.
Obama tax plan lower than Reagan’s
Arther Laffer’s predictions of economic collapse when tax cuts expire in 2010 is also questioned by The Motely Fool. In his column Laffer says we’re all going to die when the highest federal personal income tax rate goes to 39.6 percent from 35 percent. The Fool says it’s worth noting that the 1983 cuts Laffer remembers so fondly lowered top rates from 69.13 percent to 50 percent. Top marginal tax rates under all but one year of Ronald Regan’s presidency were more than 50 percent. The Obama tax plan wants to revert the highest personal income tax rates to 39.6 percent, where they were in the ’90s when the economy boomed and the government collected more taxes than it spent.
Arther Laffer feels your pain
Arther Laffer, the chairman of an investment consulting firm and obviously very wealthy, is making predictions of economic collapse from a very narrow point of view. Bangalore goes further to point out that the obstacles the economy will face in 2011 have nothing to do with tax increases. A severe credit crunch, lackluster job growth, and housing market challenges are factors that will have far greater influence on the economy. Most people will keep their head up and try to survive. But when Arthur Laffer’s personal income tax rate goes up 5 percent, the millions he won’t pocket will seem like the end of the world indeed.
The above news blogs are full of bias information. It is difficult to find the truthand accurate information in bias opion blogs. In my humble opinion taxes are evil when you pit one social class against another. Taxes destroy a person desire to prosper and be successful. It is worng and thievery to over tax the poor or wealthy. We have around 546 politicians who like greedy barons of the past. The greedy barons around the beltway of Washinton, D.C. are causing the pawns to hate each other. The Wall Street Investment Bankers like Golmann Sach, Lehman Brothers, Morgan Stanley and the Bank of America's are looting America and building up a Communist regime who killed 60,000,000 of their own people not long ago. We have met our enemy and it is us. Bogdan
Who cares about the black and white issue. All of them are in bed with each other making back room deals to seal our fate, selling out the country for their benefit, not ours. Democrat or Republican, doesn't make any difference. the birds has two different wings, but flight plan doesn't change. Period. Its the bankers who create the money out thin air, who is actually running this country. Not these puppets who u intend to trust.. It boils down to who u trust, man's government or God's government, that never needs a bailout.
What is mind boggling about this is that noone mentions that the tax increases will not generate as much tax revenue as expected. Raising the regular federal tax rates on people making over $250k will, for a large majority of that group, not increase tax revenue. Why? Because while that family's regular tax liability will increase, they will still pay AMT and that will not increase. So for example, if a family in 2010 had a regular tax liability of $100 and an AMT tax liability of $130, they paid $130. In 2011, after the tax cuts expire, that same family will have a regular tax liability of $120, but will stay pay the $130. Expiring tax cuts without fixing AMT will do nothing for raising taxes on a large part of the population.
Do the math on your situation, I did and the gov't will wind up not seeing another nickel from me, due to no fault of mine.
George H.W.Bush was right about Reganomics. He called it voodoo.
Pure smoke and mirrors. Borrow and spend to create the illusion of prosperity while the economy crumbles. I remember working during the Reagan years. Pay raises were few and far between. Remember “lean and mean and no one over forty need apply”? That was Reaganomics.
The economy under George W. Bush? Well, his $6.5 trillion addition to the federal deficit speaks for itself.
INFIL-TRAITOR in Chief and Sharria TimeBomb blew…damage done…demoRatts legislating away our future…Czars will plan to stay forever…so what will you do to make sure your offspring live in a free capitalist and constitutionally governed Republic? Nov2 but if that is canceled, then let the real Patriots step up…this crap must stop…
The author of this article makes numerous misstatements and misrepresentations. The economy grew after Clinton got a Republican congress and he followed their fiscal lead; There was NO budget surplus after Clinton – just fancy accounting (for example, Clinton never repaid social security..); and the economic growth with the Bush tax cuts gave us one of our greatest ever boom cycles – with statistically zero unemployment. Problem was the Repub congress spent $$; and last 2 yrs with Demo congress the spending accellerated – all the while refusing to address the KNOWN problems with mortgages/securities etc. The uncertainty as to what Washington is going to do next is as damaging to the business environment as are all the new laws tucked away in the stimulas and other bills. Look at the actual numbers – often there is little difference between the amount of revenue collected (initially) with tax cut and tax hike; BUT under a tax hike the economy shrinks = tax cut the economy grows to the benefit of everyone. btw, the revenue growth with the bush tax cuts covered the cost of the war – the problem was all the other new and increased spending by the gov't. Guess the author depends on his readers lacking time to research the actual numbers and/or surrounding facts – or just doesn't care if he is found to be lying to his readers. Completely irresponsible.
But the numbers clearly don't support any of what you seem to be imply.
Laffer and Schiff CNBC Re: Likelihood of a recession. Aug 28 2006.
http://news.goldseek.com/GoldSeek/1205727731.php
Laffer starts in @ 2:00 with a confident forecast. 4 years later I think we can agree Schiff made a more accurate prediction.
Face it, Libs. You live a lie. RR was right. You guys know so much that isn't so.
'Face it Lib's" that says it all! That encapsulates your entire argument.
You think this is a some kind of football game. Not only do you have a name for the opponent but now you can point to a different color face.
Fantastic and all that's on the line is America….
Go ahead and hate the black man but know this, allowing a one trillion dollar tax cut to 250,000 of the wealthiest on the planet to expire will help balance the budget and strengthen the dollar…period, end of report.
To imply that billionaire tax cuts are needed is rubbish. Clinton proved that with a massive economic expansion and a balanced budget.
You so called concervative Republicans cut off one million unemployed and 16 billion to sates to save a one time cost of 30 billion??? What’s up with that? I just gave you a one trillion dollar permanent, painless, proven savings.
Those are the facts and if you were a conservative you’d acknowledge that but you wont. Why? Because you are an imposter that simply hates a black man.
you are a racist pig!!!!
doug, you are an ignorant racist.