What did Arthur Laffer do?
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Laffer is best known for the Laffer curve, an illustration of the concept that there exists some tax rate between 0% and 100% that will result in maximum tax revenue for government. In certain circumstances, this would allow governments to cut taxes, and simultaneously increase revenue and economic growth.
Do people actually believe in trickle-down economics?
Some studies suggest a link between trickle-down economics and reduced growth, and some newspapers concluded that trickle-down economics does not promote jobs or growth, and that “policy makers shouldn’t worry that raising taxes on the rich […] will harm their economies”.
Why do people believe in trickle-down economics?
Workers ultimately benefit from trickle-down economics as their standard of living increases. And since people keep more of their money (with lower tax rates), they’re incentivized to work and invest.
What did Milton Friedman believe?
Milton Friedman was an American economist who believed in a free market and less government involvement. In contrast to the Keynesian theory, Friedman subscribed to monetarism, which highlighted the importance of monetary policy and that shifts in the money supply have immediate and lasting effects.
What did Paul Krugman do?
Krugman was President of the Eastern Economic Association in 2010, and is among the most influential economists in the world. He is known in academia for his work on international economics (including trade theory and international finance), economic geography, liquidity traps, and currency crises.
Why did trickle-down economics fail?
Trickle-down economics generally does not work because: Cutting taxes for the wealthy often does not translate to increased rates of employment, consumer spending, and government revenues in the long term.
Did Laffer’s imagery outperform his arguments?
But Laffer’s imagery overpowered the arguments of his critics. ”To most quantitatively-inclined people unfamiliar with economics, [Laffer’s] explanation of economic inefficiency was a striking concept, contagious enough to go viral,” says economist Robert Shiller, who studied the concept’s persistent popularity in a recent paper (pdf).
Why is the Laffer curve so popular?
“It has been said that the popularity of the Laffer curve is due to the fact that you can explain it to a congressman in six minutes and he can talk about it for six months,” economist Hal Varian once mused. Even in the late 1970s, most economists disagreed with Laffer’s assertion that the US was in the “prohibitive” range of the curve.
Do Republicans still believe in the Laffer curve?
Despite the Laffer curve’s 1980s flop, Republicans have steadfastly refused to give up on the theory. If anything, Laffer’s theory seems to have become more popular among GOP candidates. In 2004, president George W. Bush claimed his sweeping tax cuts would grow the economy and boosted tax receipts.
What did Laffer draw with a napkin?
So Laffer grabbed a napkin, uncapped a Sharpie, and drew two perpendicular lines and a blimp-shaped curve, halved by a faint dotted line.