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Someone has either never seen “Ferris Buller’s Day Off,” can’t remember it very well, or didn’t pay attention. This was covered in class!
In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the... Anyone? Anyone?... the Great Depression, passed the... Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act? Which, anyone? Raised or lowered?... raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression. Today we have a similar debate over this. Anyone know what this is? Class? Anyone? Anyone? Anyone seen this before? The Laffer Curve. Anyone know what this says? It says that at this point on the revenue curve, you will get exactly the same amount of revenue as at this point. This is very controversial. Does anyone know what Vice President Bush called this in 1980? Anyone? Something-d-o-o economics. Voodoo economics.
I watched this movie 3-4 times and even when reading this, I'm still spaced out.
Ben Stein just has a voice that makes me tune him out.
Such a great voice for comedy. Shame he's anti-abortion, pretty racist, pro-Regan and Trump, weirdly against evolution... So many awful perspectives.
You can see his point. Look where it got us, we should have stayed in the sea.
Or we should've listened to what native americans were trying to tell us for centuries.
Yeah, can we vote for some intelligent design please. The old regime isn't working out.
Worth noting Laffers claim had already been proven to be likely true by the time that was filmed. The claim is you can set a tax rate so high that it can encourage tax evasion, avoidance, and fraud and that reducing the rate below this level can bring in as much if not more tax revenue which was demonstrated to be likely true in 1983.
Or we could just fund the IRS since it’s a profit center.
We could do both?
proven to be true? that is news to me.
proven to be likely true and you can look at the 1983 tax cuts for evidence of it being likely true.
So the cut that went into effect in '83 was passed in '81, just before a recession hit. So the US seeing an increase in revenue compared to the few years before that where unemployment was up over 8% and gdp dropping, is really more about the economy recovering than tax policy changes.
Except the size of the cut was substantial and we still brought in more revenue because of people moving wealth from foreign banks to US ones. Your explanation doesn’t account for this.
proven likely true means not proven true. Way to many factors. I personally thing the theory has a sorta merit but is very limited and vague (in the sense of there is no identification of where the exact sweet spot of taxation levels are). For example the punitive measures for not paying taxes at very high levels need to be very severe to curtail such behavior. So five figure owning person or mom and pop shop you give a slap on the wrist. Maybe 10% of owed added. Wealthiest individuals and companies get knocked completely out of their level so like 500% of what was owed.
To be clear it isn’t a theory. It really is an idea explained on a cocktail napkin. There seems to be a rate that if you reduce it under you get more recenue which worked once in 1983. There’s nothing to support further cuts though
I would not even say it worked once in 83. Lower rates are one possible reason but like anything with the economy there are plenty of factors including cyclical changes that could explain it.
By all indicators more money was moved back into the USA from abroad and tax revenues were up. That seems to suggest the idea has some degree of merit
I mean that sounds more like a tax haven situation. Honestly to stop that I think countries should require companies meet their tax rate globally where they can deduct what they pay elsewhere.
Yes the money was moved out of the tax havens because it was preferable to have here after the top rates were reduced. That’s why it is considered to be a viable notion
See. to me. we became the tax haven.
That’s a fairly accurate reading of an unintended result of this.
Laffer curve in political practice is BS. It is proven that you raise 0 revenue at 100% tax rate because no one is actually paid to work, then. The political distortion is "therefore, always lower taxes for more revenue".
No it makes sense it just isn’t scientific nor does it justify any cut after 1983.
That was my point on how it is misused.
Planet Money interviewed the professor who wrote the book from which Ben Stein is reading in that scene.
It is an older episode they re-air periodically. I think this one:
https://www.npr.org/2024/12/11/1218506684/worst-tariffs-ever-update
I know it from the Newsroom