Art Laffer Punches NY Square In The Mouth

Arthur Laffer is, of course, famous for developing the 'Laffer Curve'. Boiling it down into terms I can understand, it says that decreasing tax rates actually leads to increased tax revenue along with the inverse, that increasing tax rates actually leads to decreased tax revenue. Both, of course, only to an extent. You'd have to be a moron to extrapolate it to infinity - decreasing tax rates to zero will not expand revenues to infinity. Increasing tax rates to 100% will not (immediately) lead to revenues of zero.

Again in terms I can understand, the reason for this is something that static scorers, Keynesians, and, well, pretty much every leftist in America fails to take into account - human behavior. If you impose confiscatory tax rates, the people that have money will shelter it instead of spending or investing it. Even people below 'the rich' will do this to an extent - why hire a couple of people to grow your small business if the increased income simply triggers a higher tax rate that means all that extra work results in no more benefit to you? Similarly, by letting you keep more of what you earn, lower tax rates lead to higher revenues because now people with money are investing it and spending it - which grows the economy and, yes, spreads the wealth around (the right way), rising tide lifts all boats - all that sort of thing. Unfortunately for the naysayers, there is concrete proof that Laffer is the one that is correct here - Eastern Europe, Ireland, Kennedy, Reagan, Clinton, Bush...all saw revenues and productivity rise when tax rates were cut.

Restating - if you raise tax rates 'the rich' who are the engines that drive economies, will shelter their money instead of spending or investing and you will see revenues overall fall.

So I see the papers and TV are reporting that one of the likely reasons for the projected multi-BILLION dollar budget deficit in NY is the fact that 'the rich' are doing things like protecting their assets (to avoid high and going higher taxes), not investing (to avoid high and going higher taxes), and even moving out of state (to avoid high and going higher taxes).

I guess it's about time for another round of letters to the local dailies and editorials shouting "good riddance!" at the departing wealthy like Rush Limbaugh and Tom Golisano?

How's that working out for you?