Quote:
The right question to ask is not what tax rate maximizes government revenues, but what is the proper scope of government activity. That’s all we should pay for.
THANK YOU, George, for that post. I have argued against using the Laffer Curve to maximize government revenue for just those reasons. Our main concern should be keeping people as free as possible, not keeping government as flush as possible.
To that end, and in the hopes of not alienating cut-averse lawmakers and bureaucrats, I have argued for a revenue-neutral tax cut based on Lafferian principles. I assume (and it’s a resoundingly safe assumption, given the past couple of years) that we are at present beyond the government-revenue-maximizing point (i.e., the apex of the Laffer Curve). But I would aim to cut the rate below the government-revenue-maximizing rate.
Here’s how it would look (click the graph for a larger image):
Apart from restoring a great measure of economic freedom, another advantage of this approach would be to ensure that, should a significant crisis present itself and the government truly need more revenue (key word: truly; i.e., not the persistent “crisis” and “need” talk that buzzes above Washington like the some mad white-noise machine), lawmakers would be able to yield it with a modest tax increase.
