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For me the Laffer Curve is the best illustration of how widespread economic ignorance is. Using the back of an envelope, a sixth-grader could become an almost instant expert on the Laffer Curve. Yet Biden travels the country calling it "Trickle Down Economics," and, here's the most disheartening part, Republicans let him get away with it because they don't understand it either.

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The Laffer Curve is somewhat problematic in application, but as a theoretical construct it provides a useful comparison between economic consequences of taxation and the revenue consequences of prices in an imperfectly elastic and competitive market .

https://www.investopedia.com/terms/l/laffercurve.asp

The problem in utilizing the Laffer Curve is that identifying the T* optimal tax rate is as reliable as identifying the i* "natural" interest rate. The situation is compounded by the realities of the complex modern tax structure.

However, broadly speaking, the Laffer Curve shows why lowering tax rates and expanding the tax base is generally a good policy for government--not only is tax revenue maximized but so so is participation in the system of taxation.

Where "Bidenomics" becomes unhinged is that it seeks to apply punitive tax rates while failing to close or correct tax loopholes. Consequently, it raises tax rates but shrinks the tax base. Not only does this exacerbate deficits, but it means fewer individuals are participating in the tax system. That breeds cynicism about the tax system and encourages everyone to "game" the system--a suboptimal result on all fronts.

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While it doesn't pinpoint the optimal rate, do we have any doubt the current rate at the local, state and federal is higher than the optimal? While most politicians look on cluelessly.

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My optimal T* is 0, so I'm there by default.

The main problem I have with the Laffer Curve is it proposes means to maximize tax revenue. I'd much rather shrink tax revenue and shrink the government accordingly.

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Yep, they are following us "over the cliff."

The real bet is which one of us will hit the valley floor first.

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I suspect right now China is winning the race to the bottom. They are masters of incompetence.

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Yeah, Totalitarian Communist Empires will do that for you, certainly less efficiently than crony capitalism, now will it beat crony capitalism mixed with Marxist Fascism?

Well, I will just say it will be exciting, in more ways than one.

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The one thing that is certain is that the collective IQ of the world's economic "experts" is collapsing faster than either the US or the Chinese economy.

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