The Laffer Curve illustrates the basic idea that changes in tax rates have two effects on tax revenues: the arithmetic effect and the economic effect.
I used the so-called Laffer Curve all the time in my classes and with anyone else who would listen to me to illustrate the trade-off between tax rates and tax revenues.
Each and every year, the United States loses an estimated $100 billion a year in tax revenues due to offshore tax abuses by the wealthy and large corporations.
Of course, tax revenues have ended up being substantially higher than they were at the time these dire projections were made, and we are very close now to having a balanced budget. All that has been very helpful.
Fewer people working means permanently lower tax revenues.
Federal gas tax revenues that are paid into the trust fund by highway users should be used for programs that benefit highway users.
The unhappy irony is that, while 'Glee' is hitting the heights, school arts funding is being slashed across the country due to the steep recession and declining tax revenues.
A more productive economy in the long term will bring us higher tax revenues, but that requires long-term investment in infrastructure and the skills necessary to grow a balanced economy.
It isn't only rich countries that suffer from the effects of tax havens. Developing countries also lose billions of dollars in tax revenues due each year because wealthy individuals and some companies use tax havens to move assets and income offshore.
The harsh reality is that we simply cannot tax our way out of our overspending and debt problem. We need a balanced approach that includes both a stronger economy to generate new tax revenues and bipartisan guardrails, which will help ensure that future presidents and congresses spend within our means.
