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What’s the relationship between the Rahn Curve and the Laffer Curve? For the uninitiated, the Rahn Curve is the common-sense notion that some government is helpful for prosperous markets but too much government is harmful to economic performance. Even libertarians, for instance, will acknowledge that spending on core “public goods” such as police protection and […]

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There’s an old saying that there’s no such thing as bad publicity. That may be true if you’re in Hollywood and visibility is a key to long-run earnings. But in the world of public policy, you don’t want to be a punching bag. And that describes my role in a book excerpt just published by […]

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Last month, I shared a very interesting video from Canada’s Fraser Institute that explored the link between economic performance and the burden of government spending. There’s now an article in the American Enterprise Institute’s online magazine about this research. The first half of the article unveils the overall findings, explaining that there is a growth-maximizing […]

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Please share this video with everyone you know. It explains the “Rahn Curve,” which is a spending version of the Laffer Curve. Named after Cato Institute’s Richard Rahn, the Curve shows that modest amounts of government spending – for core “public goods” such as rule of law and protection of property rights – is associated […]

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As illustrated by this video tutorial, I’m a big advocate of the Laffer Curve. I very much want to help policy makers understand (especially at the Joint Committee on Taxation) that there’s not a linear relationship between tax rates and tax revenue. In other words, you don’t double tax revenue by doubling tax rates. Having […]

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I’m a big advocate of the Laffer Curve. Simply stated, it’s absurdly inaccurate to think that taxpayers and the economy are insensitive to changes in tax policy. Yet bureaucracies such as the Joint Committee on Taxation basically assume that the economy will be unaffected and that tax revenues will jump dramatically if tax rates are […]

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Back in 2010, I wrote a post entitled “What’s the Ideal Point on the Laffer Curve?” Except I didn’t answer my own question. I simply pointed out that revenue maximization was not the ideal outcome. I explained that policy makers instead should seek to maximize prosperity, and that this implied a much lower tax rate. […]

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The Laffer Curve is a graphical representation of the relationship between tax rates, tax revenue, and taxable income. It is frequently cited by people who want to explain the common-sense notion that punitive tax rates may not generate much additional revenue if people respond in ways that result in less taxable income. Unfortunately, some people […]

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One of my frustrating missions in life is to educate policy makers on the Laffer Curve. This means teaching folks on the left that tax policy affects incentives to earn and report taxable income. As such, I try to explain, this means it is wrong to assume a simplistic linear relationship between tax rates and […]

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President Obama is proposing a series of major tax increases. His budget envisions higher tax rates on personal income, increased double taxation of dividends and capital gains, and a big increase in the death tax. And his health care plan includes significant tax hikes, including perhaps the imposition of the Medicare payroll tax on capital […]

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There are plenty of people on the left who write serious and substantive articles about fiscal policy. For instance, I strongly disagree with many of the policy prescriptions from the IMF and the OECD, but those international bureaucracies are reasonably rigorous with data. Heck, they even use real data when they’re being dishonest. Some people, […]

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I want more people to become rich. That’s why I support free markets. But a few already-rich people say such silly things that I wonder whether a big bank account somehow can lead to a loss of common sense. For background information on this issue, there’s a Politico article on some of the recent statements […]

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Arthur Okun was a well-known left-of-center economist last century. He taught at Yale, was Chairman of the Council of Economic Advisors for President Lyndon Johnson, and also did a stint at Brookings. In today’s column, I’m not going to blame him for any of LBJ’s mistakes (being a big spender, creating Medicare and Medicaid). Instead, […]

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I’ve just finished up a week of teaching at Northeastern University in Shenyang, China. I mostly taught public finance and explained issues such as marginal tax rates, double taxation, the Rahn Curve, the Laffer Curve, and the fiscal implications of demographic change. I also gave a lecture on comparative economics and looked at nations that […]

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I wish my leftist friends understood the Laffer Curve. I also wish they understood the downsides of artificially low interest rates. And the Rahn Curve. And comparative advantage. But perhaps more than anything else, I wish they understood that poor people aren’t poor simply because rich people are rich. John Stossel has a new video […]

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When I argue with my statist friends about the proper size and scope of government, they accuse me of not wanting public services. My typical response is to explain that I am a strong supporter of markets as the method to get high-quality roads, schools, and healthcare. But I’m wondering whether this answer pays too […]

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I sometimes sardonically comment about Democratic politicians playing Santa Claus, but Republicans can play that game as well. Trump and his allies in Congress recently agreed on a big-spending budget deal that lavishes more money on both the Pentagon and domestic programs, and that was only a few weeks after agreeing on a tax reform […]

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I gave a couple of speeches about fiscal policy in Australia late last week. During the Q&A sessions (as so often happens when I speak overseas), the audiences mostly asked questions about Donald Trump. I generally give a three-part response. I tell them I was surprised by the election results. I tell them Trump is […]

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It’s not that much fun to be a libertarian, at least if you work in public policy. You spend your days hoping that “Public Choice” can be overcome, which means you’re laboring to fulfill Sisyphean tasks. Trying to convince politicians and bureaucrats to voluntary give up power and control over the economy. Good luck with […]

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To be blunt, I don’t think the World Bank should exist. We don’t need an international bureaucracy to promote economic development in poor nations. Particularly since the policies that we know will work – free markets and small government – oftentimes are hindered by intervention from multilateral institutions such as the World Bank. For example, […]

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At the risk of understatement, I’m not a fan of the Organization for Economic Cooperation and Development. Perhaps reflecting the mindset of the European governments that dominate its membership, the Paris-based international bureaucracy has morphed into a cheerleader for statist policies. All of which was just fine from the perspective of the Obama Administration, which […]

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Now that Donald Trump has been elected, one of my main goals will be to convince him and his team that it would be wrong to leave government spending on autopilot (and it would be even worse to spend more money and increase the burden of government!). Since Trump semi-endorsed the Penny Plan, I don’t […]

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Since I’ve referred to the International Monetary Fund as both “the Dumpster Fire of the Global Economy” and “the Dr. Kevorkian of Global Economic Policy,” readers can safely conclude that I’m not a fan of the international bureaucracy. My main gripe is that senior bureaucrats routinely make the mistake of bailing out profligate governments (often […]

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Back in 2011, I shared a video that mocked libertarians by claiming that Somalia was their ideal no-government paradise. I pointed out, of course, that the argument was silly. Sort of like claiming that North Korea is the left’s version of policy paradise. But the video was very clever, and I’m more than willing to […]

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President Obama recently took part in a poverty panel at Georgetown University. By D.C. standards, it was ideologically balanced since there were three statists against one conservative (I’ve dealt with that kind of “balance” when dealing with the media, as you can see here and here). You won’t be surprised to learn that the President […]

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As a fiscal policy economist who believes in individual liberty and personal responsibility, I have two goals. 1. Replace the corrupt and punitive internal revenue code with a simple and fair flat tax that raises necessary revenue in the least-destructive and least-intrusive manner possible. 2. Shrink the size of the federal government so that it […]

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In my writings on the Laffer Curve, I probably sound like a broken record because I keep warning that a nation should never be at the revenue-maximizing point. That’s because there’s lots of good research showing that there are ever-increasing costs to the economy as tax rates approach that level. So the question that policy […]

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I’ve shared lots of data and evidence about the harmful economic impact of government spending. Simply stated, budgetary outlays divert resources from more productive uses. And this results in labor and capital being misallocated, leading to less economic output. The damage is even more pronounced when you look at how politicians finance the budget. Whether […]

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Regular readers know that I like to mock big government and the hacks who are drawn to politics. This explains why I’ve always enjoyed cartoons that portray the state as a blundering, often-malicious, overweight nitwit. You can see some of my favorite examples here, here, here, here, here, here, here, here, here, here, and here. So in that tradition, let’s set aside serious […]

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I feel a bit like Goldilocks. No, this is not a confession about cross-dressing or being transsexual. I’m the boring kind of libertarian. Instead, I have a run-of-the-mill analogy. Think about when you were a kid and your parents told you the story of Goldilocks and the Three Bears. You may remember that she entered […]

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