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Letter: Lawmakers should explain where the economy stands

Lawmakers should explain where the economy stands

I realize a tax cut may stimulate the economy and possibly result in more revenue for the Treasury. The key word in my last sentence was “may;” I did not use “will.”

Arthur Laffer, the noted supply-side economist, theorized that there was a curve with a point where the tax rate and the amount of taxes collected would be optimal. If the tax rate was above the optimal rate, a tax reduction would actually increase revenue (not reduce it!). However, if the tax rate was below the optimal rate, a tax cut would cut revenue.

If you were running for office, the position that taxes should be cut would appeal to most voters. Some politicians like to assume that a tax cut will always result in more tax revenue. They know, or should know, it probably is not true; they just want votes. They are confident voters lack basic knowledge of economics.

If it were true that a tax cut would always increase revenue, why not reduce taxes to 1 percent. Obviously this would not work; the economy would have to be over 20 times larger than it is now for this to work.

The real issue is where are we on the Laffer Curve. If the tax rate is above the optimal point, taxes should be cut; if the rate is below that point, taxes should not be cut. Reporters and voters should force lawmakers (and Sarah Huckabee Sanders) to explain the curve, and why they feel we are above the optimal rate. If they cannot do that, they should be reminded that it is a curve, not a straight line!

Len Almquist

Hamburg

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