Friday, September 17, 2004


Proof that conservative idiots are always recycled.

For those who may not remember, Laffer was the guy who scribbled what became known as the "Laffer curve" on napkin to demonstrate how if you cut taxes then revenues will magically go up! The idea (correct) being that too high tax rates will so discourage economic activity and encourage evasion that by lowering them revenue collected will increase. That part isn't crazy. What's crazy are all the people who think it always works - the lower the taxes, the higher the revenues! Or, specifically, the question is what is the tax rate which maximizes revenue? (not that revenue maximization is necessarily your goal, but if you haven't yet reached that rate then it just isn't true that lowering taxes will increase revenues).

So, that famous little napkin helped Reagan enact the largest tax cut in history, which was almost immediately followed by the biggest tax increase in history as the wheels started to come off the wagon.