Tuesday, December 11, 2012

Murray Rothbard on What is Worse Higher Taxes or Higher Deficits

Plus bonus discussion on supply-siders and the Laffer curve.


  1. I can not tell when Rothbard made these comments, but there are a few studies out there that given some credence to the notion of the *Laffer Curve*.

    Listening to Rothbard it does not seem he outright denies that it could be true.

    I think the concept of maximizing govt revenue via studies on tax rates is evil none the less...but we should not ignore the possibility of it being true even if we do not like it.

    I also agree that supply side discussions and the Laffer curve seem to come up simultaneously...but they truly are two distinctly different things.

  2. Name one study that gives credence to the Laffer Curve.

    1. http://www.nber.org/papers/w15343

      though this one is probably more salient:




      and this:


      I am not going to say the studies are *correct* or come to the right conclusions. But they are there, and I personally think the concept that at some point in time tax revenue starts to drop as the rate goes higher seems somewhat axiomatic.

      The debate at which % that occurs would obviously be a central planner discussion and I find morally repugnant...but it does not mean that it isnt a reality.

      Of course, the notion that the Laffer curve would be uniform in any way across different economic structures/society is *laffable* :), but the idea that taxes raised enough start to hinder revenue gathered at some point in all economies does not seem to be that much of a stretch to me.

    2. Yikes, these are really crazed "studies" you reference. They are all models with insane assumptions.

      This doesn't refute Rothbard one bit.

      What is your point here anyway? Laffer holds, as Rothbard points out, that all tax cuts will instantaneously result in increased in revenue. As Rothbard says that is doubtful. Of course, if you raise the tax rate to 99%, you will have a fall off in revenue, which Rothbard wouldn't dispute. So where are you differing from Rothbard?

    3. *Yikes, these are really crazed "studies" you reference. They are all models with insane assumptions.

      This doesn't refute Rothbard one bit.

      What is your point here anyway?*

      I did not say it did. In fact, if you re-read my original statement I said Rothbard left open the issue of the legitimacy of the Laffer curve in his commentary.

      I mearly answered your question:

      *Name one study that gives credence to the Laffer Curve.*

      I make no other points other than I think we shouldnt dismiss the Laffer curve concept even if it is not in agreement with a philosophy of liberty or morally grounded...in my estimation it detracts from our ability to wage war philosophically & factually in other more important areas.

      I am not differing from Rothbard; he himself doesnt conclusively dismiss the Laffer curve.

    4. I felt I need to clarify just a bit more:

      I believe it necessary that we move conversation away from the Laffer curve when discussing supply side economics even though opposition may want to bundle them together. That was my main point.

      Supply side arguments are far easier to deal with and the real crux of the issue...the Laffer curve is just a distraction in the big picture.

    5. Laffable! Cute. It's true, the lower rates do generate higher tax revenues at a certain point (it's obvious- at 1% taxes will be +/-1% but at 99% they will be far less than 99% and the economy will be MUCH smaller) but it is a hateful, state loving and evil system. Starve the damn beast.