Johnson dusts down the old Laffer curve – a long discredited theory convenient for the rich, suggesting lower tax brings in more revenue. But the IMF – no lefties – studying revenue-maximising rates finds virtually all countries could raise top rates considerably higher and bring in significant extra sums: the UK and the rest could raise their rates to an optimal 60% or more before they lose more than they gain.
The New Palgrave Dictionary of Economics, reviewing all the research, finds Laffer doesn’t kick in until about 75%. But don’t expect Laffer to disappear from the lexicon of bad reasons why the rich should pay less.
So the Laffer Curve is a long discredited theory but now we’ve got to have a discussion of when it’s true?
Even by Polly’s standards that’s pretty good, doncha’ think?