WSJ and Laffer: Curve Fitting 101

[Rufus T. Firefly]

Originally posted by LordShiva
http://pages.cs.wisc.edu/~kovar/hall.html

That was the best laugh as I've had in quite a while.

[Thue]

Originally posted by Blaupanzer
"Figures don't lie, but liars figure." Select your data carefully enough, and you, too, can prove that Norway has a great tax system or Cuba has a great health care system.

Actually, My understanding is that Cuba probably has a pretty decent health.care system, at least when you compare to the resources used. And especially when you compare to uninsured people in the USA.

@WSJ

[Japher]

Just look at Castro! They must have a good health care system to keep that crone alive this long!

[Ramo]

They also have huge personal income taxes, iirc, so that would bias this (if Tax income as % of GDP includes personal income tax, which it well may).

The data only includes corporate receipts.

[Ramo]

"Figures don't lie, but liars figure." Select your data carefully enough, and you, too, can prove that Norway has a great tax system or Cuba has a great health care system. Depends on the point you are trying to prove, not what the data actually reveals. WSJ readers are mostly corporate types who would love to see lower corporate taxes. Thus, a chart proving you get more from less. Yeah, right.

This can't entirely be attributed to intellectual dishonesty.

[Master Zen]

The WSJ writes some of the stupidest, most biased op-eds. I've ever read about my country. I sometimes wonder if the people that write about Mexico have actually been here.

[Odin]

Originally posted by Master Zen
The WSJ writes some of the stupidest, most biased op-eds. I've ever read about my country. I sometimes wonder if the people that write about Mexico have actually been here.

If Murdoch buys it the BS is the op-eds will spread and infest the rest of the paper.

[jkp1187]

Originally posted by Thue


Actually, My understanding is that Cuba probably has a pretty decent health.care system, at least when you compare to the resources used. And especially when you compare to uninsured people in the USA.

@WSJ

Yup. They sure cleared up AIDS in Cuba -- all they had to do was throw anyone with the disease in prison. Good job!

[GePap]

Originally posted by jkp1187


Yup. They sure cleared up AIDS in Cuba -- all they had to do was throw anyone with the disease in prison. Good job!

Yeah, good job

[Master Zen]

Originally posted by jkp1187


Yup. They sure cleared up AIDS in Cuba -- all they had to do was throw anyone with the disease in prison. Good job!

Aaaand, that has absolutely nothing to do with the point unless the point is talking about draconian quarantine methods. Which isn't the point.

The Cuban health care system, for the record, might be a cliché at times (especially when debating health care). It's not as good as most of its proponents claim (most of whom are first-world leftists who have never been to Cuba in the first place but think it's some sort of egalitarian paradise)... but it's far far better than it's detractors claim. Far far better. And in more ways than not, up to first-world standards. Definitely years ahead of even the closest Latin American country.

Let me put it this way: I know people whose will curse Castro to hell and back but talk nothing but praise about health care in the island.

[snoopy369]

Originally posted by Blaupanzer
"Figures don't lie, but liars figure." Select your data carefully enough, and you, too, can prove that Norway has a great tax system or Cuba has a great health care system. Depends on the point you are trying to prove, not what the data actually reveals. WSJ readers are mostly corporate types who would love to see lower corporate taxes. Thus, a chart proving you get more from less. Yeah, right.

Again... the ultimate proposition [in some nations lowering tax rates but eliminating loopholes] may not be flawed. I just don't see how that graph helps

It will help in the following cases:

1. Where (loopholes eliminated) > (tax rate decrease).
Simple math.

2. Where businesses choose to come to the nation because of the tax decrease, where before they were not aware of the loopholes and/or not interested in playing the games to get them.

As above, I doubt this is the case across the board, or even in a large number of nations, but I don't doubt that in a meaningful percentage (10%-30%) of nations this might be the case. The US especially [where loopholes are abundant, both corporate and private].

[Master Zen]

Btw, as an economist I can say this: the Laffer Curve has been completely perverted by the Right to it's own purpose. For conservatives, it has turned into sheer dogma with no actual relevance to it's actual construction.

The reason is that right-wingers purposely fail to mention that according to Laffer, lowering taxes increases revenue only if you're on the right side of the curve, not if you are on the left. i.e. a statement like "the Laffer Curve says that dropping taxes increases revenue" is false because it can very well be that the economy is on the left side where the reverse is true: if you drop taxes, revenue decreases as well. Conservatives never say that, instead they always assume that the economy is on the right side.

In short, the Laffer Curve has become just one more of many preposterous dogmas that these people use to "back up" their economic ideology.

[Master Zen]

Originally posted by snoopy369


Again... the ultimate proposition [in some nations lowering tax rates but eliminating loopholes] may not be flawed. I just don't see how that graph helps

It will help in the following cases:

1. Where (loopholes eliminated) > (tax rate decrease).
Simple math.

2. Where businesses choose to come to the nation because of the tax decrease, where before they were not aware of the loopholes and/or not interested in playing the games to get them.

As above, I doubt this is the case across the board, or even in a large number of nations, but I don't doubt that in a meaningful percentage (10%-30%) of nations this might be the case. The US especially [where loopholes are abundant, both corporate and private].

Firms could care less about revenue, what they are interested is maintaining financial equilibrium. When there's a change in tax law, firms have to adjust one way or another and the bottom line is whether the have to pay more taxes. This can happen (I believe this is what you are referring to by your first point) even by dropping tax rates but closing loopholes (you'd be surprised how taxes can soar just by closing major loopholes even when rates fall).

Ultimately the corollary for a tax reform to work is to have a competitive economy. Most people fail to consider this. By having an economy kidnapped by monopolies, companies will simply adjust to tax reforms by layoffs and with little potential for new companies to enter the market. That said, a poorly designed tax reform can ruin industries too.

First rule of economics is: there's never a panacea.

[Wittlich]

Oh Dear God! Looking at the only first post - My eyes glazed over...Dear Lord, do I HATE mathematics!

But I do digress ... do carry on.

The point to my post: Hold a loaded gun to my head and demend an answer: You might as well "spin the chamber" since anything out of my mouth would be a total shot in the dark! (pardon the pun)

[Straybow]

Originally posted by Master Zen
The WSJ writes some of the stupidest, most biased op-eds. I've ever read about my country. I sometimes wonder if the people that write about Mexico have actually been here.

Ahhh, so every economist in Mexico agrees with you. And everything is working so well, too!