Three New Critiques of Arthur Laffer’s Supply-Side Model Show Tax Cuts as Junk Economics

Sorry, Grover Norquist; sorry, GOP – it’s time to come up with a real economic policy…

One of the most frequently repeated talking points used by lawmakers seeking to reduce or eliminate income and estate taxes is that doing so will usher in an economic boom. Recently a number of observers, led by supply-side economist Arthur Laffer, have sought to bolster this argument by claiming that states lacking an income tax or estate taxes have economies that far outperform those in the states with the highest top tax rates.

Three new reports from Institute on Taxation and Economic Policy show that the truth is exactly the opposite.

The reports analyze Laffer’s underlying model that claims to show how his tax cutting proposals boost economic growth. The first takes on the misleading measures of economic health that Laffer uses and the second shows the distorted variables he includes in his regression analysis in looking at state income taxes. The third report breaks down Laffer’s false claim that eliminating the estate tax can lead to job creation.

via Institute on Taxation and Economic Policy.


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