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Taxes Have Consequences: An Income Tax History of the United States
As seen on Kudlow on the FOX Business Network!
The definitive history of the effect of the income tax on the economy.
Ever since 1913, when the United States first imposed the income tax via constitutional amendment, the top rate of that tax has determined the fate of the American economy. When the top rate has been high, as in the late 1910s, the 1930s, 1940s, 1950s, and 1970s, the response of those with money and capital has been to curtail real economic activity in favor of protecting assets and income streams. Huge declines have come to the economy in these circumstances. The most brutal example was the Great Depression itself. When the top tax rate has been cut and held at reduced levels—as in the 1920s, the 1960s, in the long boom of the 1980s and 1990s, and briefly in the late 2010s—astonishing reversals have occurred. The rich have brought their money out of hiding and put it to work in the economy. The huge swings in the American economy since 1913 have had an inverse relationship to income tax rates.
The definitive history of the effect of the income tax on the economy.
Ever since 1913, when the United States first imposed the income tax via constitutional amendment, the top rate of that tax has determined the fate of the American economy. When the top rate has been high, as in the late 1910s, the 1930s, 1940s, 1950s, and 1970s, the response of those with money and capital has been to curtail real economic activity in favor of protecting assets and income streams. Huge declines have come to the economy in these circumstances. The most brutal example was the Great Depression itself. When the top tax rate has been cut and held at reduced levels—as in the 1920s, the 1960s, in the long boom of the 1980s and 1990s, and briefly in the late 2010s—astonishing reversals have occurred. The rich have brought their money out of hiding and put it to work in the economy. The huge swings in the American economy since 1913 have had an inverse relationship to income tax rates.
440 pages, Hardcover
Published September 27, 2022
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Displaying 1 - 18 of 18 reviews
February 27, 2026
100% enfocado en la economía estadounidense (el título en español no hace referencia a esto, tampoco lo mencionan en la contraportada). Es interesante el análisis que se hace a lo largo de la historia de USA, y cómo cada época y cada política afectaban a la recaudación fiscal.
Creo que el análisis entregado no aplica a otras regiones del mundo. Ni la Europa post-guerra (o entreguerras), ni los países “tigres” asiáticos desde los años 60’, ni la cambiante Sudamérica en la segunda mitad del S XX se pueden comparar con la economía estadounidense del mismo periodo.
PS: Cuando sea multimillonario voy a volver a leer este libro para evadir impuestos; tiene una excelente lista de ejemplos de qué hacer, qué funcionó y qué fue cambiado por algunos pillos que lograron evadir con mucho éxito.
Creo que el análisis entregado no aplica a otras regiones del mundo. Ni la Europa post-guerra (o entreguerras), ni los países “tigres” asiáticos desde los años 60’, ni la cambiante Sudamérica en la segunda mitad del S XX se pueden comparar con la economía estadounidense del mismo periodo.
PS: Cuando sea multimillonario voy a volver a leer este libro para evadir impuestos; tiene una excelente lista de ejemplos de qué hacer, qué funcionó y qué fue cambiado por algunos pillos que lograron evadir con mucho éxito.
December 3, 2022
Fact Based & Compelling
If only the populous would read this book they would conclude prosperity is reachable by constraining the government. A flat tax would provide greater prosperity and its greatest benefit would be to take the “deal making” away from Congress.
If only the populous would read this book they would conclude prosperity is reachable by constraining the government. A flat tax would provide greater prosperity and its greatest benefit would be to take the “deal making” away from Congress.
November 8, 2022
I thoroughly enjoyed this historical romp through the tax history of the United States, beginning in 1913 all the way up to 2021. Decide for yourself, but to me the Laffer Curve is alive and well across the entire history. The book starts by pointing out that a person’s consumption, investments, gifts, wealth all come from income. Hence, all taxes are income taxes, regardless of what we call them. Income taxes function as the price of income, since People don’t work to pay taxes, but earn after-tax income. The bombshell in the book is the cause of the Great Depression. It debunks the myth that WWII ended the Great Depression, for two reasons:
1. Tax rate cuts in 1945, especially at the very top, taking the top rate of 94% to the low 80s% (which Eisenhower restored in 1950s back to 82%-91%, due to the Korean War)
2. The epic decline in govt spending
Also, obviously, GDP grows with military spending, but people only get to consume what’s left over (you can’t eat a tank). Some highlights from the following time periods:
1913-1919: Even President Wilson, and his Treasury Secretary, Carter Glass, admitted high rates passed due to WWI had exceeded the point of productivity.
1920s: The story of Andrew Mellon and his important book, Taxation: The People’s Business, published in 1924.
1930s: The Smoot-Hawley Tariff, Revenue Act 1932, excise taxes, social security taxes, and state and local levies ballooned in this decade, which the book proves was the chief cause of the Great Depression. When I was young and naïve, I believed in the monetary cause posited by Milton Friedman: A 1/3 decrease in the money supply from 1929-1933. But tax effects was much bigger.
Further, state and local govt spending permanently rose. In 1920 is equated to 5.1% of GDP, and in 1933 it was 14.2%. The authors call this growth in state spending the “Unindicted coconspirators” in the causes of Great Depression.” The state and local taxes were piled on top of this, increasing state/local tax burdens from 4.7% of GDP in 1929 to 7.6% in 1932. Between 1930-39, 26 of 48 states adopted a sales tax; from 1928-1939, from 12 states to 33 adopted a personal income tax. In the 1930s, 21 states increased tax rates (1 decreased them). In 1928, there were 12 states that had a corporate income tax, by 1939 it was 34, and during the 1930s there were 19 increases in those corp tax rates, and only 2 decreases. Property tax revolts in the 1930s make Prop 13 in CA look like child’s play, another ignored fact in the history of the Great Depression. With high top tax rates, taxable reported income declines. Highest income earners have the most flexibility to earn income or not. To avoid high tax rates, they can have:
*Unrealized cap gains, charity/death (stepped-up basis)
*Tax free bonds, deferred compensation, retirement plans, stock options (cap gains vs. earned income)
*Non-taxable perks at work (art, 3-martini lunches, benefits, vacation homes, corp jets (7x the number of airliners), cars, country clubs, barter, Yachts, horse ranches, sports teams, etc.)
The richest 1% income did not decrease due to income redistribution from rich to poor! It was because income was never reported but disguised through loopholes. This blows up Thomas Piketty’s arguments in Capital in the 21st Century. No matter how high the rates got (from 7% to 91%) the fabled top 1% paid the same proportion of total income in taxes: About 20%. The authors tell the little known income- splitting tax law change (joint tax returns or married filing separately), which also helped the rich not pay top rates, passed in late 1947, over Truman’s veto.
The term Supply-side economics was meant as a term of derision, coined by Herbert Stein (Ben Stein’s dad, “Bueller, Bueller”). Yet the left seems to understand how tax affect behavior, since they are massive proponents of sin taxes, (alcohol, cigarettes, etc.), carbon taxes, etc. When you tax something you get less of it; when you subsidize something, you get more of it. A country cannot tax its way to prosperity.
This is tax wonk’s book, but it also is a great history. Brian Domitrovic also wrote, with Larry Kudlow, JFK and the Reagan Revolution: A Secret History of American Prosperity, published in 2016. We were honored to interview Brian on The Soul of Enterprise on the book Taxes Have Consequences. You can listen to that show here:
https://www.thesoulofenterprise.com/t...
Notable
The Times asked William F. Buckley:
Q.: Have you ever cheated on your taxes?
A.: I suppose so. It’s impossible not to cheat on your taxes.
Q.: How much should one pay in taxes?
A.: As much, but not more, than your neighbors pay.
1. Tax rate cuts in 1945, especially at the very top, taking the top rate of 94% to the low 80s% (which Eisenhower restored in 1950s back to 82%-91%, due to the Korean War)
2. The epic decline in govt spending
Also, obviously, GDP grows with military spending, but people only get to consume what’s left over (you can’t eat a tank). Some highlights from the following time periods:
1913-1919: Even President Wilson, and his Treasury Secretary, Carter Glass, admitted high rates passed due to WWI had exceeded the point of productivity.
1920s: The story of Andrew Mellon and his important book, Taxation: The People’s Business, published in 1924.
1930s: The Smoot-Hawley Tariff, Revenue Act 1932, excise taxes, social security taxes, and state and local levies ballooned in this decade, which the book proves was the chief cause of the Great Depression. When I was young and naïve, I believed in the monetary cause posited by Milton Friedman: A 1/3 decrease in the money supply from 1929-1933. But tax effects was much bigger.
Further, state and local govt spending permanently rose. In 1920 is equated to 5.1% of GDP, and in 1933 it was 14.2%. The authors call this growth in state spending the “Unindicted coconspirators” in the causes of Great Depression.” The state and local taxes were piled on top of this, increasing state/local tax burdens from 4.7% of GDP in 1929 to 7.6% in 1932. Between 1930-39, 26 of 48 states adopted a sales tax; from 1928-1939, from 12 states to 33 adopted a personal income tax. In the 1930s, 21 states increased tax rates (1 decreased them). In 1928, there were 12 states that had a corporate income tax, by 1939 it was 34, and during the 1930s there were 19 increases in those corp tax rates, and only 2 decreases. Property tax revolts in the 1930s make Prop 13 in CA look like child’s play, another ignored fact in the history of the Great Depression. With high top tax rates, taxable reported income declines. Highest income earners have the most flexibility to earn income or not. To avoid high tax rates, they can have:
*Unrealized cap gains, charity/death (stepped-up basis)
*Tax free bonds, deferred compensation, retirement plans, stock options (cap gains vs. earned income)
*Non-taxable perks at work (art, 3-martini lunches, benefits, vacation homes, corp jets (7x the number of airliners), cars, country clubs, barter, Yachts, horse ranches, sports teams, etc.)
The richest 1% income did not decrease due to income redistribution from rich to poor! It was because income was never reported but disguised through loopholes. This blows up Thomas Piketty’s arguments in Capital in the 21st Century. No matter how high the rates got (from 7% to 91%) the fabled top 1% paid the same proportion of total income in taxes: About 20%. The authors tell the little known income- splitting tax law change (joint tax returns or married filing separately), which also helped the rich not pay top rates, passed in late 1947, over Truman’s veto.
The term Supply-side economics was meant as a term of derision, coined by Herbert Stein (Ben Stein’s dad, “Bueller, Bueller”). Yet the left seems to understand how tax affect behavior, since they are massive proponents of sin taxes, (alcohol, cigarettes, etc.), carbon taxes, etc. When you tax something you get less of it; when you subsidize something, you get more of it. A country cannot tax its way to prosperity.
This is tax wonk’s book, but it also is a great history. Brian Domitrovic also wrote, with Larry Kudlow, JFK and the Reagan Revolution: A Secret History of American Prosperity, published in 2016. We were honored to interview Brian on The Soul of Enterprise on the book Taxes Have Consequences. You can listen to that show here:
https://www.thesoulofenterprise.com/t...
Notable
The Times asked William F. Buckley:
Q.: Have you ever cheated on your taxes?
A.: I suppose so. It’s impossible not to cheat on your taxes.
Q.: How much should one pay in taxes?
A.: As much, but not more, than your neighbors pay.
January 29, 2023
The authors provide an excellent case study analysis of different periods and tax changes and the economic situation during them. There is much to learn about the incentive effects to save, work, and invest from changes in taxes. I highly recommend reading this book to learn more.
March 31, 2026
Arthur Laffer’s Taxes Have Consequences is the definitive modern scripture of supply-side economics. While the authors present this "income tax history of the United States" as a series of objective cause-and-effect relationships, a harmonious radical critique—synthesizing Marxist, Leninist, Maoist, Anarchist, and Syndicalist perspectives—reveals it as a sophisticated manual for the management of class exploitation.
The book attempts to sanitize a century of economic warfare by turning the struggle between labor and capital into a bloodless debate over "marginal tax rates". From the radical left, the "consequences" Laffer describes are not economic laws, but the tactical maneuvers of a ruling class determined to protect its stolen surplus.
The Radical Critique: The "Optimum Rate of Theft"
The Marxist View on Surplus Value: Laffer argues that high taxes on the rich stifle growth. A Marxist counters that the "wealth" being taxed is merely the surplus value—the profit owners keep after paying workers as little as possible. Taxes are simply the state’s way of reclaiming a portion of that stolen labor to sustain the capitalist system.
The Leninist View on Monopoly Capital: The book’s focus on "investment moving toward bonds" describes the movements of a parasitic financial oligarchy. To a Leninist, Laffer’s history is a guide for Imperialist Management, facilitating the concentration of capital into fewer hands.
The Anarchist/Syndicalist View on the State: Laffer seeks the "Laffer Curve" to maximize revenue. Anarchists see this as finding the "optimum rate of theft"—the exact percentage the state can take without triggering a workers' revolt. Syndicalists argue that instead of "avoiding taxes" through luxury offices, that wealth should be under the direct democratic control of the workers who produced it.
Historical Examples: Why the "Tax-First" View is Wrong
The Book's Argument: Attributes the Depression to Hoover’s tax hikes and the Smoot-Hawley Tariff.
This ignores the Crisis of Overproduction. No tax cut could fix a system where the working class had been exploited so thoroughly they could no longer afford the goods they produced. The "recovery" wasn't a tax miracle; it was the shift to a War Economy in WWII that forced production through state power.
The "Luxury Culture" of the 1950s
Claims high taxes under Eisenhower led to a culture of "luxury lunches" and offices as a form of untaxed compensation
This is an admission of Class Power. While workers faced stagnant wages, the ruling class used their position to misappropriate the fruits of labor into personal luxury, proving that the rich will always find ways to bypass the "social contract" unless the means of production are seized.
"The theory of marginal progressive taxes... is actually wrong "
This is a dangerous dismissal of the only (albeit weak) tool the liberal state has to curb extreme inequality.
By labeling progressive taxation as "wrong," the authors advocate for a Plutocracy where the concentration of wealth is allowed to reach feudal levels, destabilizing society and crushing the poor.
"The first time detailed is a series of ways through which the rich can avoid taxes."
The authors treat tax evasion (through municipal bonds or "pseudo-corporations" ) as a natural "behavioral response."
This normalizes Capital Sabotage. It suggests that the state should never tax the rich because they will simply hide their money—essentially holding the public treasury hostage to the whims of billionaires.
A series of positive factors brought by Trump's tax cuts... primarily the growth of fiscal receipts
This ignores the Class Contradiction. While "fiscal receipts" might grow, the real-world consequence was a massive transfer of wealth upward, increasing the precarity of the working class and gutting social safety nets.
This logic justifies the looting of the public realm for private gain, disguised as "growth."
Taxes Have Consequences is a brilliant defense of a predatory system. It counts the "receipts" while ignoring the human cost. To follow Laffer’s "consequences" is to accept a world where the 1% dictates the terms of human existence.
The book attempts to sanitize a century of economic warfare by turning the struggle between labor and capital into a bloodless debate over "marginal tax rates". From the radical left, the "consequences" Laffer describes are not economic laws, but the tactical maneuvers of a ruling class determined to protect its stolen surplus.
The Radical Critique: The "Optimum Rate of Theft"
The Marxist View on Surplus Value: Laffer argues that high taxes on the rich stifle growth. A Marxist counters that the "wealth" being taxed is merely the surplus value—the profit owners keep after paying workers as little as possible. Taxes are simply the state’s way of reclaiming a portion of that stolen labor to sustain the capitalist system.
The Leninist View on Monopoly Capital: The book’s focus on "investment moving toward bonds" describes the movements of a parasitic financial oligarchy. To a Leninist, Laffer’s history is a guide for Imperialist Management, facilitating the concentration of capital into fewer hands.
The Anarchist/Syndicalist View on the State: Laffer seeks the "Laffer Curve" to maximize revenue. Anarchists see this as finding the "optimum rate of theft"—the exact percentage the state can take without triggering a workers' revolt. Syndicalists argue that instead of "avoiding taxes" through luxury offices, that wealth should be under the direct democratic control of the workers who produced it.
Historical Examples: Why the "Tax-First" View is Wrong
The Book's Argument: Attributes the Depression to Hoover’s tax hikes and the Smoot-Hawley Tariff.
This ignores the Crisis of Overproduction. No tax cut could fix a system where the working class had been exploited so thoroughly they could no longer afford the goods they produced. The "recovery" wasn't a tax miracle; it was the shift to a War Economy in WWII that forced production through state power.
The "Luxury Culture" of the 1950s
Claims high taxes under Eisenhower led to a culture of "luxury lunches" and offices as a form of untaxed compensation
This is an admission of Class Power. While workers faced stagnant wages, the ruling class used their position to misappropriate the fruits of labor into personal luxury, proving that the rich will always find ways to bypass the "social contract" unless the means of production are seized.
"The theory of marginal progressive taxes... is actually wrong "
This is a dangerous dismissal of the only (albeit weak) tool the liberal state has to curb extreme inequality.
By labeling progressive taxation as "wrong," the authors advocate for a Plutocracy where the concentration of wealth is allowed to reach feudal levels, destabilizing society and crushing the poor.
"The first time detailed is a series of ways through which the rich can avoid taxes."
The authors treat tax evasion (through municipal bonds or "pseudo-corporations" ) as a natural "behavioral response."
This normalizes Capital Sabotage. It suggests that the state should never tax the rich because they will simply hide their money—essentially holding the public treasury hostage to the whims of billionaires.
A series of positive factors brought by Trump's tax cuts... primarily the growth of fiscal receipts
This ignores the Class Contradiction. While "fiscal receipts" might grow, the real-world consequence was a massive transfer of wealth upward, increasing the precarity of the working class and gutting social safety nets.
This logic justifies the looting of the public realm for private gain, disguised as "growth."
Taxes Have Consequences is a brilliant defense of a predatory system. It counts the "receipts" while ignoring the human cost. To follow Laffer’s "consequences" is to accept a world where the 1% dictates the terms of human existence.
April 3, 2023
It's really much more than a boring recount of "An Income Tax History of the United States" that the title gives it credit for. TLDR: economic growth and government tax revenues are both indirectly proportional to tax rates. Unlike a typical finance textbook, this is written with easy to follow language that keeps readers engaged with its wit and humour. Nevertheless, it doesn't compromise on quality and depth. There are tables and charts with interpretations, constructed using real data, supporting the thesis. The core message is that when governments raise taxes, hoping to collect more money from rich citizens, it always backfires, because the rich always have both the motivation and means to end up only paying the amount they are happy to pay - which is, of course, minimum. Anecdotal details expounding on this make for a really entertaining read. Conversely, low tax rates make it not worth the effort to "manage", thus it follows that overall, the nation ends up able to collect a larger amount. There's a lot of repetition of key theories throughout. That makes readers constantly refresh and be reminded of them, making it for highly effective stickiness. Thumbs up to this one.
May 10, 2026
Taxes Have Consequences gives a cleaner way to think about taxes as incentives, not just as revenue. Laffer and the other PhDs start with strong theory, then do a good job showing how that theory actually played out across history. The main idea is simple and hard to ignore, higher taxes do not just collect more money. They ultimately change where capital goes. Wealthy people with tax advisors are not going to sit still and pay the highest possible rate if legal alternatives exist. It’s in anyone’s rational best interest to shift money into safer or more tax favored assets, including government securities and municipal bonds, instead of private investment. That starves private capital markets, weakens growth, and can even reduce the revenue the government hoped to collect. Even though I only read a little over half, I got the core argument clearly. The later part of the book mainly reinforces the theory by showing it applied again and again throughout history.
October 26, 2024
The authors track the entire history of Federal tax rates from 1913 to the present with particular focus on the upper tax rates levied on the highest earners, and the impact of those rates on the national economy.
This book, or a full summary of it, should be required reading for anyone seeking public office.
It would also be of value to the decision-making process of voters supporting the ever-present refrains of "Tax the rich!" and "Corporations and the wealthiest Americans need to pay their fair share."
Historical data does not support these policies as achieving their intended results.
Counterintuitive, interesting and indisputable.
This book, or a full summary of it, should be required reading for anyone seeking public office.
It would also be of value to the decision-making process of voters supporting the ever-present refrains of "Tax the rich!" and "Corporations and the wealthiest Americans need to pay their fair share."
Historical data does not support these policies as achieving their intended results.
Counterintuitive, interesting and indisputable.
September 9, 2025
dnf 25%... maybe it gets better
even in this short portion what's reiterated is cut taxes for rich will increase tax revenue... why, well 1) the tax code is full of loopholes that the rich will exploit 2) via those loopholes, their elite well paid tax lawyers will trounce "good enough for gubment" staff 3) tax enforcement sux...
so instead of eliminating loopholes then bolstering staff pay and enforcement tactics, consider it trying to get blood from a turnip...
what's missing is the possibility that increased tax revenues are due to increased enforcement on those who cant hire fancy attorneys
even in this short portion what's reiterated is cut taxes for rich will increase tax revenue... why, well 1) the tax code is full of loopholes that the rich will exploit 2) via those loopholes, their elite well paid tax lawyers will trounce "good enough for gubment" staff 3) tax enforcement sux...
so instead of eliminating loopholes then bolstering staff pay and enforcement tactics, consider it trying to get blood from a turnip...
what's missing is the possibility that increased tax revenues are due to increased enforcement on those who cant hire fancy attorneys
January 5, 2023
Proves what we thought all along
Hard to believe, when laid out, how every boom and bust of the US economy was related to taxation. It's so obvious. Explained well, and Laffer really builds each case on its individual historical merits.
I'm at the age where I lived through the hardships of the 70s and recovery of the 80s. Looking back on my personal experiences, much of what I lived was guided by the tax structure I didn't understand at the time. Fascinating read.
Hard to believe, when laid out, how every boom and bust of the US economy was related to taxation. It's so obvious. Explained well, and Laffer really builds each case on its individual historical merits.
I'm at the age where I lived through the hardships of the 70s and recovery of the 80s. Looking back on my personal experiences, much of what I lived was guided by the tax structure I didn't understand at the time. Fascinating read.
January 29, 2024
I have learned a ton reading this! The fluctuations in our tax rates throughout history and the subsequent effects are unknown to most Americans but it is so important to understanding the basics of economics and politics!!
January 28, 2025
great book on usa tax history
great book because writer challenged thomas piketty and explain cause of great depression based on tax (tariff) policy.
you will learn a lot about tax system after reading it
great book because writer challenged thomas piketty and explain cause of great depression based on tax (tariff) policy.
you will learn a lot about tax system after reading it
February 26, 2023
Chocked full of data and oft-repeated points but still a good read. Glad I read this one - it's eye-opening.
April 9, 2023
Bias confirmation would prevent Liberals from understanding the underlying historical facts of this book. History proves that lower rates lead to higher tax collections.
May 28, 2024
An excellent book, which shows the clear link between taxation and the health of the American economy!
April 29, 2025
Who could have guessed!
October 8, 2024
The book is a concise history of the income tax in the US. It makes several points which are worth repeating. First, tax rates do matter - bring them too high and recipes will plummet. The author's data on the effects of key tax cuts (Kennedy, Reagan, Trump) is clear and concise. Second, the book argues that the Great Depression was a consequence of Gold (Bernanke's claim) or confiscatory monetary policy (Friedman's argument) but on tax rates. Beginning with the Hoover tax increases in the early 30s and Smoot Hawley - which was in effect a tax because of the way the bill was written - tax policy was a major factor in constraining growth. From my perspective, I think that downturn was a consequence of a series of lousy economic decisions including tax policy.
The authors also explain why the growth coming out of the 2006-2008 recession was so horrible. Obama's supporters have been diligent in trying to explain away the terrible performance in growth and jobs after that recession. This book puts it clearly on tax policies.
Laffer and his co-authors also make a case against stimulus payments. The evidence from the 2006-08 recession and from the pandemic reinforce that set of conclusions.
If you want some good data on the effects of various tax regimes or if you want a vigorous defense of supply side theory - this is the book for you. If you continue to believe in Keynesian theory - then this book won't be of much assistance.
I read this again while waiting for a surgery. IT was worth the repeated. The book makes three points which I did not focus upon.. First, he thinks that taxes (including the revenue act of 1931 under Hoover and SMOOT HAWLEY) were major factors to encourage an uncertain economy into its terrible state. I have always thought that absurd monetary policy (like the explanation of Milton Friedman) was a major cause. After rereading LAFFER I think a series of idiotic policies combined to bring us down. Second, he argues that just because you raise rates on high income taxpayers doesn’t mean that more revenue will accrue. The top quintiles in income have a lot of discretion on when and how to take income. In spite of tons of evidence to the contrary, some tax theorists think that this time raising rates will produce tons of revenue even though one hundred years of data supports the point. Finally the book has a raft of data on foolish taxes and on Piketty and Sáez contentions on distribution of income, Tax laws which have sunsets are less likely to produce dynamic effects.
The authors also explain why the growth coming out of the 2006-2008 recession was so horrible. Obama's supporters have been diligent in trying to explain away the terrible performance in growth and jobs after that recession. This book puts it clearly on tax policies.
Laffer and his co-authors also make a case against stimulus payments. The evidence from the 2006-08 recession and from the pandemic reinforce that set of conclusions.
If you want some good data on the effects of various tax regimes or if you want a vigorous defense of supply side theory - this is the book for you. If you continue to believe in Keynesian theory - then this book won't be of much assistance.
I read this again while waiting for a surgery. IT was worth the repeated. The book makes three points which I did not focus upon.. First, he thinks that taxes (including the revenue act of 1931 under Hoover and SMOOT HAWLEY) were major factors to encourage an uncertain economy into its terrible state. I have always thought that absurd monetary policy (like the explanation of Milton Friedman) was a major cause. After rereading LAFFER I think a series of idiotic policies combined to bring us down. Second, he argues that just because you raise rates on high income taxpayers doesn’t mean that more revenue will accrue. The top quintiles in income have a lot of discretion on when and how to take income. In spite of tons of evidence to the contrary, some tax theorists think that this time raising rates will produce tons of revenue even though one hundred years of data supports the point. Finally the book has a raft of data on foolish taxes and on Piketty and Sáez contentions on distribution of income, Tax laws which have sunsets are less likely to produce dynamic effects.
May 29, 2023
The thesis of this book is that increasing taxes on the wealthy does not work because wealthy people find ways to evade them and the result is less investment and therefore less economic growth and overall dynamism. I agree wholeheartedly.
Displaying 1 - 18 of 18 reviews