Laffer Curve Vindicated?

6/23/26 Mountain States Policy Center points to reductions in the Montana state income tax rate and subsequent increases in total revenue. The Montana state tax agency's report seems to confirm this, showing a 211% increase in income tax revenue. However, CPI increased 43% from January 2014 to May 2026. There was a real inflation-adjusted increase in revenue. Why?

The Laffer Curve explanation is that increased business activity because of incentives to business activity. If you get to get keep more of your income, you are likely to take more risks. This increases gross profits and therefore taxable income.

Another explanation is that high-income people from other states (California, Washington, Colorado) are increasing taxable income. Even if this explains it, it is only a slight variation on Laffer Curve. High-income people choose states where they get to keep more of their income. Hence the influx to states without state income tax such as Tennessee (headed there Friday to buy a new home), Wyoming, Texas, Florida, and Texas.

Unless every state decides to go full Democrat and enact state income taxes at the same rate, lowering state income tax rates seems like a straightforward to increase revenues. Of course, that assumes this is the goal not the semisocialist "fairness" (envy) concept.

Try Not to Go Into Shock: N.Y. Times Op-Ed Piece Calling Out Democrats on Their Support for Rich People

 9/7/20 New York Times:

The election is a referendum not only on the moral failings of President Trump, Democrats argue, but on the economic fissures of the new economy. It is a fight, Mr. Biden says, on behalf of “the young people who have known only an America of rising inequity and shrinking opportunity.”

Why on earth, then, are Democrats fighting — and fighting hard — for a $137 billion tax cut for the richest Americans? Mr. Biden, Nancy Pelosi and Charles Schumer don’t agree on everything, but on this specific issue they speak with one voice: the $10,000 cap on deductions for state and local tax (better known as the SALT deduction) must go.

I cannot think of a better example of how Democrats claim to favor the poor, while actually favoring the rich, than this absurdity.  The article goes onto the skewer the rest of the tax cut bill, but here is an area where this change hurt people who are paying $25,000 a year in property taxes (what do you think the property taxes are like on those $100 million houses in the Hollywood Hills and Malibu Beach are like?), and because the standard deduction increased, the vast majority of Americans came out ahead.  The next time one of your wealthy liberal friends (but I repeat myself) complains about economic inequity, ask them why Democrats are trying to make Bezos, Bill Gates, and the Google billionaires better off.

When Even CBS Throws the Democrat Talking Points Under the Bus

1%er Complains About His Wealth

6/27/17 CNBC:

Warren Buffett says people like him are the problem with the U.S. economy.

With a net worth of more than $75 billion, Buffett is currently the second richest man alive, according to Forbes. As the CEO of investing house Berkshire Hathaway, he is hallowed as the Oracle of Omaha. But for all his personal success, Buffett says the issue really is the 1 percent.

"The real problem, in my view, is — this has been — the prosperity has been unbelievable for the extremely rich people," says Buffett on PBS Newshour.

"If you go to 1982, when Forbes put on their first 400 list, those people had [a total of] $93 billion. They now they have $2.4 trillion, [a multiple of] 25 for one," he says. "This has been a prosperity that's been disproportionately rewarding to the people on top."

Okay, Warren, put your money where you mouth is.   $75 billion given to the poorest 5 million Americans would be $15,000 per person.  Why do rich people always back candidates who want more money going to the government instead of using their wealth to help the poor?

Who Is Proposing To Lower Corporate Income Tax Rates?

One of those evil Republicans running for President?  Perhaps some evil Tea Partier who is a puppet of the Koch brothers?  No, the guy who spends all his time trying to sell us on the evils of rich people:

WASHINGTON (Reuters) President Barack Obama will call for cutting the top 35 percent corporate tax rate as early as this month, according to two sources close to the administration.

The president is likely to propose a rate closer to an average of that seen in peer nations, the sources said.

This would jibe with remarks made last year by Treasury Secretary Timothy Geithner, who suggested the United States should be moving to a rate more in line with its major trading partners in the high 20-percent range.

I actually agree that lowering corporate income tax rates is a good idea to encourage multinational corporations to make their money in America, instead of in lower tax rates countries.  I used to work for a German company that bought office supplies from Germany at a ridiculous price as a way to move net profit from a high tax rate country to a low rate country--and this was strictly penny-ante stuff.  I am sure that many corporations do stunts far more outrageous for this exact reason.

There are a number of sleazy stunts that are part of corporate finance that probably need attention at the same time.  I'm reading a tendentious book called Perfectly Legal that nonetheless makes some good points about the sleazy manner in which corporations provide use of jets for corporate officers--and the tax code makes it effectively tax-free for the officers.

What upsets me is the way that Obama and other Democrats make a big issue of being on the side of the little people and how Republicans are on the side of big corporations and rich people--and the Democrats are at least as much whores for those interests as Republicans.