I’ve already posted the Cato Institute’s overnight response to the President’s state-of-the-Union speech.
Here’s the Dan Mitchell pre-SOTU speech to congressional staffers.
I’ve already had people ask me for the charts I used in the speech.
Here’s the double taxation chart.
Here’s the tax complexity chart.
Here’s the data on the Laffer Curve in the 1980s.
And here’s the Washington Post cartoon on the value-added tax.
[…] on January 28, 2012 at 8:25 am Dan Mitchell’s State-of-the-Union Tax Analysis « International Liberty […]
“I know that my income was far less than $200K in both 1980 and 1988…”
How come I’m not surprised?
Interesting charts,
If I were ask to use these charts in a stand-up presentation I would be hard pressed to make a case for lower tax rate on the rich.
Consider the Laffer Curve data chart –
In 1980 we have 116,757 tax payers paying $19,003,420 income tax. That tells me that each of these tax payers sent a check to the IRS of $162.75.
In 1988, 723,697 tax payers paid $99,742,043 or $137.82 per return.
I know that my income was far less than $200K in both 1980 and 1988 and I am sure that I paid more that $162 to the IRS in both of these years.
I am glad that in 1988, 723,697 highest income earners in the US chipped in a $138.00 each. The tax rate does not effect these people – it is the loopholes built into the tax code.
You should proof your charts – I think the income and tax columns are in $k, but even with moving the decimal three places to the right the average tax paid in 1988 is less than in 1980. And it is noted that there are 6.2X tax payers in this group so I would guess that the tax paid should increase about the same.
Hopefull, you can flash these charts up and no one will have time to see if they make any sense. It worked for Al Gore
I don’t know why I read and try to see if it makes sense. Keep up the good work.
Indeed, Obama’s speech was more of a SOTUD (State Of the Union’s Decline…speech) …and plans to accelerate it even further.
…apart for adaptation of the rich to higher tax rates… the second main reason that the mid-long term Laffer Curve looks different than the short-term Laffer Curve (long-term peak occurs earlier) is that it takes a while for the compounding effect of growth/no-growth to kick in.
Lifetime choices towards passive mediocrity is the third major effect on the long-term Laffer curve. Those take an even longer time to kick in and are virtually impossible to reverse. That is what is happening in America today… but the momentum of past exceptionalism will be exhausted quickly in an ever faster moving world.
In the graphs you showed the effect of higher growth is captured in the greatly increased number of rich individuals (much beyond what can be accounted for by inflation and population growth).