“California raised taxes, Kansas cut them. California did better,” writes David Cay Johnston at Al Jazeera America:
… Read the rest
Ever since economist Arthur Laffer drew his eponymous curve on a napkin for two officials in President Richard Nixon’s administration four decades ago, we have been told that cutting tax rates spurs jobs and higher pay, while hiking taxes does the opposite.
Now, thanks to recent tax cuts in Kansas and tax hikes in California, we have real-world tests of this idea. So far the results do not support Laffer’s insistence that lower tax rates always result in more, better-paying jobs. In fact, Kansas’ tax cuts produced much slower job and wage growth than in California.The empirical evidence that the Laffer Curve is not what its promoter insists joins other real-world experience undermining the widely held belief that minimum wage increases reduce employment and income.
The Laffer Curve refers to a theory of marginal effects of tax rates on tax revenues, which goes back hundreds of years, at least to a 15th Century Muslim scholar named Ibn Khaldun.