I also share your opinion that Obama is using government for his own purposes, and I’m not yet sure just what those purposes are. If you take him at his words, he’s admitted that punishment is one of them. I often wonder if he’s a pawn for George Soros, which, if so, then leads me to question which of them will eventually survive the other.

IMHO, he’s pretty much doing the exact opposite of what will be good for the country in all of his executive decisions and policies. The question is whether he is doing it innocently or intentionally to destroy.

But the big problem is one that Obama seems to think most important, which is not that taxes should raise money for appropriate programs, but, in his opinion, they should be used to punish the people of whom he disapproves.

Interesting that even in economic mathematics, leftists assume a simplistic answer (a more-or-less linear function), whereas conservatives recognize that it’s a lot more complex than that.

I subbed last week in a high school calculus class, but no teaching was required.

*Both* sides of the tax dispute are assuming a nice, smooth curve. So I’m allowed to make that assumption all day and all night!

Meant to add that before.

Incidentally, the tax function would not be strictly continuous, as few things in nature are. But it’s close enough for the purposes of my exposition to consider it so. Any formula developed to describe that distorted parabola probably would be continuous, however, just to make it workable.

I answered you in the only way possible: it’s lower than where our tax rates are now.

I haven’t written an article about it yet, but my personal belief is that we’d all be better off now if the “stimulus” money had been used to reduce or eliminate taxes, rather than to set up permanent, make-work government programs. That way the government wouldn’t be choosing and playing favorites, and the general public wouldn’t be (rightfully) worrying about the massive federal deficits and confiscatory taxes that are looming in the future. The economy would be far better off than it is now, and we’d be in a position to recover without rampant inflation, by being on the left side of the tax revenue hump.

Yes, you can have pricing power to raise your prices more so in a strong demand market, not a slowing/stagnant/declining market.

Normally, business have things called “SALES”(as in price cuts=tax cuts) to raise some revenue.

How hard can this be?

Oh yeah, in Obama uptopia land real world stuff doesn’t really matter.

He describes the graph of tax rate vs. tax revenues as a “camel hump,” and I have previously heard the Laffer curve described as a “distorted parabola.” It therefore seems that he is making the claim that the Laffer Curve is a continuous function. The interval is closed and bounded by the fact that tax rates cannot be less than 0 or higher than 100, so the Laffer curve, by his description, is a function f(x) on 0<=x<=100. This makes it a real-valued function continuous in a closed and bounded interval. Therefore, according to his argument, it must have a maximum, the point where revenue is optimized.

I’m asking what he thinks that point is. How is this an illegitimate question?

If you want increased tax revenues it is much smarter to construct your tax code so that it will be easier for business men to make more money and then take a little of that. That little will add up to quite a lot if the government doesn’t get too greedy. It is greed on the part of government which kills economys. But there are certain folk who will never understand this. They believe that there is just so much good the government could do if only they could take a little more of your money – first a little and then a lot more. The result is that soon (and that was probably some time ago) they have taxed a great number of industries right out of the country.

Incidentally, Oklahoma doesn’t want refugees. We finally have a Republican legislature for the first time since statehood and we would like to keep them sane and honest for as long as possible. Under the old regime you had to leave briefcases full of the green stuff behind a certain toilet in the upstairs men’s room to have the representatives even look at your legislation. It may get back to that, but we do hope it takes a while.

On the other hand, we could be just a little bit smarter and dispose of our income tax as Texas has and it might give us a greater chance at jobs and industry moving into the state.and staying.

You are right, it is a logical theory. There is no way to prove it “factually,” other than to show that it accurately describes reality in a given set of circumstances. It’s hard to argue against its logic, however.

Right now, the optimum is below our current tax rates, IMHO.

See more below in my reply to Neil.

Yes, there may be multiple inflection points, and there may be more than one point where tangent to the curve is horizontal. But logically, there won’t be (or if there are, they won’t be far apart), because of the factors within the economy which shape the curve in the first place. Those factors dictate that it will be something like a haystack, because tax revenues have to increase from zero to something, and once they start down the right side, reality forces revenues to continue to fall as rates continue to rise. The rate of fall may change for various reasons, but it will always have a negative slope, at least once it gets a bit away from the peak.

The fact of multiple tax rates complicates the curve, as does the complex economy. That means there really isn’t a single tax rate to plot. For simplicity, I was thinking of the top marginal rate.

The curve undoubtedly changes greatly over time as well. A given “tax rate” will produce different total tax revenues in different years, and the slope of the curve at that rate will also change. It would probably take at least a 4-dimensional graph to come close to reality.

I read in the AAII Journal some years ago that Dr. James Cloonan believed the optimum tax rate for revenue purposes was about 19%. I don’t know if he was thinking of a graduated income tax rate or a flat rate, or whatever other disclaimers he might have included. He may have even been writing about capital gains taxes.

My opinion is that the optimum tax rate is the one at which some critical mass of taxpayers are taking steps to avoid the tax or at which they are prevented from improving their business due to the tax’s effect on their paying customers. In a recession like we have today, the optimum rate has moved well to the left, I believe. That’s wh I argued that we’d have been better off if we got ourselves positioned on the left side of the haystack when times are good. As the optimum rate moved lower during the bginning of a recession, revenues might not increase, but they wouldn’t go down as fast as they do on the right side of the hump. It was announced today that YTD tax revenues are down 34% from last year.

Most of the above is irrelevant to my original point, but it’s interesting, anyway.

Laffer didn’t and can’t demonstrate the precise shape of the curve. Only that there is an absolute maximum somewhere between f(0) and f(100).

So you can’t say we know the shape.