Ron Amundson’s Political Blog

an ex-Republicans View of the World, and his campaign efforts

Tax cuts and the Laffer curve

September 13th, 2008
Laffer Curve annotated with Presidents tax policy changes Kennedy - Bush and projections for McCain and Obama

Laffer Curve annotated with Presidents tax policy.

Granted, the argument the Republicans make, is the economy is still in the upper quadrant of the Laffer curve, where in decreased taxes will foster greater growth, and thus net revenue will increase. The problem with that analysis, is counterintuitive based at past history as concerns national debt as of percent of GNP.

National Debt vs GNP 1950-2010 projection

National Debt as a % of GNP over time 1950-2010 projection

http://911review.org/Media/National_Debt.html

Certainly, the Laffer curve, as are most models of economics are drastically oversimplified, to say nothing of trying to model one thing, based upon a couple of parameters, where in a kazillion parameters actually interplay. Thus, even my graph is suspect, as it doesn’t take into account mitigating factors such as disruptive technology, new markets, world events, or other avenues of revenue or lack there of, not the least of which is foreign deferment and other avoidance strategies.

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1 Comment »

  1. [...] in the 80’s was based upon the history leading up to it. Considering where we are on the Laffer Curve today, such policies just dont seem to add [...]

    Pingback by Restoring Employment | Ron Amundson's Political Blog — September 5, 2009 @ 8:06 am

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