The Laffer curve forgotten
Sunday, August 30, 2009
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In June I mentioned in an entry the difficulties they were experiencing the middle class in this crisis, following an interview Zapatero last 17 days June 2009, where he told us one lie after another, without the interviewer in this case it contradicted Concha Garcia Campoy any inaccuracies in the data that you expressed your interviewee.
"Why we can now say that they will not see tax increases, there will be no income tax amendment? No "
seems that the adverb "now" has lasted only Zapatero seventy-three days and say where he said "now," said Diego once again, as "now" goes and tells us that there will be reviews taxes and that these increases will "I limited time." all know the improvisations, measures, countermeasures, Zapatero's reforms and plans so far have been unsuccessful to resolve the crisis in which we are, but from my point of view, a tax increase could mean the lace to all the nonsense that has been proposing this good man.
American economist Arthur Laffer held a theory that explained that tax cuts lead to economic growth in the long run would increase government revenues, and this idea was embodied in its both famous and forgotten for our socialist "Laffer curve", as graphically outlined the relationship between tax rates and government revenues.
In 1981 Ronald Reagan became president of the USA, with an election promise substantial tax cut inspired Laffer macroeconomic theories, although early results were not expected, there was no increase in revenue and if on the contrary, increased the U.S. deficit, these tax cuts it does served from the beginning to see increased economic activity and economic growth was obtained, which ultimately resulted in successive years, higher revenues from the federal administration. Years on the other hand were the fastest growing in the U.S. economy since the post-World War II.
Many analysts maintaining the benefits of the Laffer theory and its relevance in a time like today. Zapetero and the Government of Spain, apparently have other ideas in their heads privileged others are not that widespread tax hikes, just, just the opposite of what should be done.
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