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July 19, 2007

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tolonaro

There doesn't seem to be any good reason for assuming a linear curve in the last graph. The data seem to imply that over ~40% Tax rate does not improve income - otherwise some government or another would be using it!

Also the scatter is very high, implying that there is some other very significant factors at work. for example, what percent of government income is corporate tax?

Vadept

I dunno, I think maybe Hasset has a bit of a point: The best revenues have a middling tax (Australia, Luxemburg), and after a certain point, they start to come back down again, which is what you would expect. The linear seems whimsically drawn, especially given that there is most certainly a drop off point show by the data points. Does this mathematician imagine that revenue will continue to increase, irregardless of how high taxes go?

I happen to think the Laffer curve stands on decent ground, though this is kind of an odd way to try to prove it. What about property taxes and personal taxes? Norway LOOKS like it's in the middle in regards to taxation, but it has some very heavy personal taxes, and America is more leneint with its taxation than most countries. Presumably middle-class spending money makes a big impact on economy too, so shouldn't we be looking at a more comprehensive examination of taxation schemes before we try to make the "Laffer Curve" point?

As Tolonaro points out, these data points barely say anything except for the bit of a drop off at the end and begining. Looks more like a waste of white space than anything else, to me.

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