Posted on by Colin Twiggs

Laffer: Increasing taxes will cause a double-dip recession

Art Laffer of Laffer Associates warns that attempts to increase taxes on the top 2% of earners will drive the economy back into recession: “They employ everyone else, invest capital and provide the economic recovery” he said.

http://video.cnbc.com/gallery/?video=3000101378.

13 Replies to “Laffer: Increasing taxes will cause a double-dip recession”

  1. He can pay instead if he feels so strongly about it… hang on he is the top 2%, go figure nothing like a un balanced view is there!

    1. So the only balanced view would come from someone in the top 2 percent who argues for increasing their taxes ….or someone outside the top 2 percent who argues against it?

      1. I believe Laffer has a valid point. Increasing taxes on the top 2 percent of earners affects not only the top 2 percent — it affects job creation in the entire economy.

        [Declaration: I am not in the top 2 percent but am available if there are any vacancies]

      3. I would support closing tax loopholes that enable some top earners to pay a lower rate of tax than their secretaries. In fact I believe the fairest system is a consumption tax (VAT or GST) where everyone pays the same rate.

      4. Is that not the point though. They do not pay their fair share of taxation. Mostly in the US by “donations” to the parties to encourage legislation that benefits them at the exclusion of the rest of the population.

        Any move to increase tax on the top 2 percent is seen and class warefare and will send the country into recession. Increase taxes against the middle class or poor is seen as required to balance the budget deficit.

        Right now my focus would be putting money into the hands of those who will spend it which in turn will drive demand and economic expainsion. I call it the trickle up effect.

        [Declaration: I am not in the top 2 percent but am available if there are any vacancies] … ditto!

      5. Putting money into the hands of those who spend it does not increase the size of the pie to be shared — it actually shrinks it as you reduce the incentive for entrepreneurs to invest and take risks.
        To increase the size of the pie, you need to put money into the hands of those who will invest it. Capital investment creates jobs. Taking money from one person (who would invest) and giving it to another (who would spend) does the opposite.

        The problem comes when debt-deflation shrinks aggregate demand, deterring new investment. Then neither of the above strategies works. The only viable solution becomes for government to print money (inflate) and invest in productive infrastructure. Inflation is simply another form of tax — on on all those who hold monetary assets, rich and poor alike.

      6. There will be no investment if there is no demand… currently we have huge balance sheets in corporate US, they have the money at their finger tips, but are not using it.
        So what changes to make corporate US want to invest if not demand for their products, services etc…
        The money to invest is already available, it’s the will to invest that is lacking, simply adding more to the pile of investment funds available does nothing but sit in the bank, not doing anything for the economy!

      7. “There will be no investment if there is no demand.” Quite right … and the way to increase aggregate demand is borrow to invest, not tax and spend.

        You are also correct in pointing out that some corporations are sitting on large cash reserves and are unlikely to invest or distribute the funds until the outlook improves. But the money does not just sit at the bank: it is loaned to investors and consumers.

  2. Taxes have to go up after decades of tax cuts and record deficits. Anyone who thinks the tax cut hole we created with tax cuts is sustainable is insane.

    Romney is super rich and has had numerous tax cuts. He hasn’t created one job with all those tax cuts. The argument for increasing taxes on the super rich is Mitt Romney. He sits on his money like most rich people.

    1. The primary cause of the public debt was not tax cuts, though it did contribute. The time to raise tax rates was during the boom, when it would have slowed creation of a bubble, not during the subsequent bust. From my experience most people get rich by investing and taking huge risks. That is how new jobs are created. We need to encourage them to continue. Not penalize them for their success.

  3. How about a discussion about doing what is right. Stop spending my money and Mitt Romneys money. The budget will NEVER be balanced if we continue to allow the politicians to but votes through the use of there votes in congress. The answer is quite simple: Everyone deserves a deduction of about 50K for a family of 4; there should be no other exemptions of any kind (ant exemptions are unconstitutional anyway) and EVERYONE pays the same % so that we are all in the boat together.

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