Dan Mitchell has worked hard to make people understand how lowering the top marginal tax rates during the Reagan administration proved how well the Laffer Curve works. Despite lowering rates, revenues from those making over $200k increased over five-fold from 1980 to 1988, thanks in large part to the growth spurred by tax cuts. But Dan has realized that not everyone wants to rejoice at Reagan’s successful tax cuts, so he has come up with another way of illustrating how the Laffer Curve works.
So I have a new strategy for getting my leftist friends to accept the Laffer Curve. I’m instead going to link the Laffer Curve to “successful” examples of left-wing policy. To be more specific, statists like to use the power of government to control our behavior, often by imposing mandates and regulations. But sometimes they impose taxes on things they don’t like.
And if I can use those example to teach them the basic lesson of supply-side economics (if you tax something, you get less of it), hopefully they’ll apply that lesson when contemplating higher taxes on thing they presumably do like (such as jobs, growth, competitiveness, etc).
Here’s a list of “successful” leftist tax hikes that have come to my attention.
- The big drop in soda purchases after a tax on sugary drinks was imposed in Berkeley.
- The big drop in home sales after a tax was imposed in Vancouver on purchases by foreigners.
- The big drop in tobacco sales after a big increase in D.C.’s tobacco tax.
- The big drop in soda purchases after a tax was imposed in Philadelphia.
Dan adds another great example from the U.K. here. These lessons should be well remembered as Congress begins negotiating the coming tax reform.
Dan Mitchell Defending Corporate Tax Competition on BBC
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