

Hate the Laffer Curve? Try Woodhill's - DanielBMarkham
http://www.realclearmarkets.com/articles/2010/09/15/hate_the_laffer_curve__try_woodhills_98671.html

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mooism2
Where do the Woodhill Curve figures come from? The article just asserts them
as facts, without indicating how they were derived.

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btilly
He argues that tax cuts create permanent compounding growth in the economy.
With even a small addition to the growth rates, the eventual tax returns
eventually will pay for the loss of the taxes (even counting compounding
interest on the debt accrued due to loss of the tax).

Of course the effects he's talking about are very small, nobody knows how to
measure them (they are basically rounding errors in a "what if" projection),
and any attempts to quantify them are open to argument. So basically anyone
who doesn't like taxes will like the idea, and anyone who doubts the benefits
of that will be entirely unconvinced.

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ajscherer
My problem with this article is that he basically asks us to assume what he
wants to demonstrate:

"Anyone who believes that repealing the corporate income tax, the capital
gains tax, and the death/gift tax would not increase economic growth by at
least 0.12 percentage points needs to consult a psychiatrist, not an
economist."

Edit: The more I think about it, this analysis is silly. Sure, a sustained
increase in GDP growth rate will dominate a decreased tax rate in the long
term. Unfortunately, what happens during the "me and/or my kids are still
alive" term matters. For example in his "you're insane if you don't believe
it" scenario where a 3% decrease in tax rate leads to a .12% sustained
increase in economic growth, the government would take in less revenue for the
first 150 years. In his "what I'd like to believe" scenario with the 3% cut
and a .26% sustained growth increase, it would only take like 70 years to
break even.

Nice try.

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DanielBMarkham
Taking out the partisan-baiting in the article, this could be a nice economics
hack. Also note that the author is a software engineer, entrepreneur, and the
creator of the hack.

