John. Look. The tax rates came down from 70% and went up only marginally to what 28%….

In effect the tax rates were still sharply reduced.

This is SIMPLE logic. You are coming up with all sorts of inconsequential arguments because they bring into the picture the SPENDING problem.

Look at the revenues John. The revenues went up every year from 1982 – 1989 and went from 550 billion to 990 billion after the tax rate decrease.

Also, unemployment dropped, the economy expanded and the base of tax payers expanded.

It is very very simple. If you lower tax rates it is better for the economy.

If you raise tax rates it has a negative impact on the economy.

You can keep denying it or trying to convince me (a well read man) but it’s like trying to convince me that H2O is not essential to life by bringing up spending.

Spending is a whole OTHER part of the equation. Increased government spending spurs economic growth and it’s ‘desired’ by us voters. We want goodies!!!

Not me.

I want the government to live within it’s means and that means I want the federal government to only spend what it takes in which is about 20% of GDP. It shouldn’t spend 23% of GDP.

One year after his massive tax cut, Reagan agreed to a tax increase to reduce the deficit that restored fully one-third of the previous year’s reduction…. Reagan raised taxes again in 1983 with a gasoline tax and once more in 1984, this time by $50 billion over three years, mainly through closing tax loopholes for business. Despite the fact that such increases were anathema to conservatives–and probably cost Reagan’s successor, George H.W. Bush, reelection–Reagan raised taxes a grand total of four times just between 1982-84.

The economy expanded despite these tax hikes and deficits, mainly because of a wave of invention that brought us the personal computer and then the Internet. But don’t kid yourself: the theory behind the “Laffer Curve” never worked. The free money never materialized. And now you have a debt that has risen to historic levels, just as the Baby Boomers get ready to retire and collect the entitlements they have paid into all these years.

As for your argument that your government spent too much: yes, the United States government spent (and spends) too much. But you have never agreed on what to cut (agricultural subsidies? defence? transportation? social insurance?) You could justify making deep cuts to many of these programs, but the beneficiaries would fight to save them. For the past forty years, you have had political leaders unwilling to tell the voters the hard truth: tax cuts mean program cuts. Tax cuts mean less for agriculture, less for defence, less of a social safety net. If you want government to do what it does for you now, you have to pay more. If you want to pay the same or less, you have to live with program cuts. That means nice people not getting subsidies, higher food prices, higher state or local taxes for highway repairs (or road closures or tolls). And at least some conservative politicians have justified their moral coewardice by promising that the theory behind the Laffer Curve will deliver pennies from heaven.

I guess I have hope as I read and read and my core beliefs changed in 1991.

I try.

Now a days, with so much information available, it is not so much important that you read a lot as it is important that you be able to sift through the data to find the truth. That takes analysis ability rather than the intrinsic ability called intelligence to soak up data and comprehend it.

For all you know, your intelligent brain could be soaking up nothing but enemy propaganda and you think it is the Good Stuff (TM).

The clarity is all here. Read.

It is their fundamental assumptions that are erroneous. No amount of reading will ever overthrow those. They are not here as blank slates for books to educate them. They need to be de-programmed first, Baklava. That requires psychological shock, not simply the absorption of data.

President Reagan cut taxes sharply in 1981 John and guess what from 1982 – 1989 revenues almost doubled from 550 Billion to 990 Billion.

What therefore was the problem as I keep saying?

It is simple…

Not too hard..

You can do it !!!

Yes you can !!!

It was the spending side of the equation. The federal government spent more than it took it. It’s revenues equalled about 20% of GDP and spending was about 23% of GDP.

You can continue the head in the sand, finger in the ear, nah nah nah nah method.

But it only hurts you……

The clarity is all here. Read.

So I claim that the Laffer Curve model has failed in practise, and the theory has allowed citizens to evade one of the most basic and most difficult responsibilities of a self-governing people.

But human need is infinite and the amount people can pay is finite. Nobody ever agrees “to do without’ and I can only pay 100% of my income.

How do you not understand that?

Whoa, whoa, whoa….

The Laffer Curve hold true even if the government spends the taxes wisely.

Even taxes for Constitutional reasons cause a loss of tax revenue above a certain marginal rate because economic activity is depressed and government money is ‘crowding out’ private.