Arthur Laffer, the famed economist providing intellectual firepower for President Reagan’s historic tax cuts, supports the tax bill cobbled together by Barack Obama and Republican lawmakers. In an exclusive statement to HUMAN EVENTS, Laffer said that his advice “is to vote for the Obama compromise,” which would keep all the Bush-era tax cuts intact. He also acknowledged, however, that “a good argument can be made to kill the” bill.
Laffer is best known for the “Laffer Curve,” an economic model that forecasts how lower tax rates invariably lead to higher tax revenue, a foundation of supply-side economics.
To Laffer, ensuring that the marginal tax rates on high-income earners as well as the rates on capital gains and dividends don’t move must take priority, even if the “compromise” has its dubious elements.
The full statement is below:
“As a standalone, a good argument can be made to kill the Obama/Congressional compromise. In fact, Bush’s 2001 tax bill should never have been passed in the first place and his 2003 bill had only a few good features.
But the good features of all of Bush’s tax cuts are the only features President Obama wanted not to extend – i.e. keeping the max tax rate on income at 35% instead of 39.6%, 15% on dividends rather than 39.6%, 15% on capital gains as opposed to 20%, and finally zero death duties down from 55%. Having the Republicans insist on tax rate reduction is fabulous.
Also, having a two year extension for lower tax rates is the gift that will keep on giving. Liberals think that the world is in a war of the classes. It’s not! As long as liberals try to pit one American against another, they’ll lose elections and only nurture their anti-social retinue of freaks and weirdos.
And, as if extending the tax cuts for two years weren’t enough, extending 99 week unemployment benefits for 13 months will extend unemployment for 13 months. This is a win/win for Republicans. When they take back government in 2013 is when we can implement a low rate flat tax, spending restraint, sound money, free trade, and limited regulations. My advice is to vote for the Obama compromise.”