Home / Markets / Industries / Real Estate
- Business Leaders
- Commodities
- Economy
- Market Overview
- Mutual Funds & ETFs
- Industries
- Innovation
- Your Money, Your Vote
- 2009 Consumer Electronics Show
-
Thursday, January 22, 2009
-
Thursday, January 22, 2009
-
Thursday, January 22, 2009
-
Thursday, January 22, 2009
-
Thursday, January 22, 2009
MORE NEWS
- Housing Starts Fall 15.5%, Hitting Record Low
- Housing Starts Plunge To Another Record Low
- Bankrate: Fixed Mortgage Rates Jump In Latest Week
- Jones Apparel Cuts Outlook, Slashes Dividend
- William Morrison 6-week Comparable Sales Up 8.2%
- Remy Cointreau Sees Fiscal '09 Drop In Operating Profit
- OfficeMax Names Ex-Circuit City CFO As Financial Chief
- Williams-Sonoma To Cut Work Force By 18%
- Phillips-Van Heusen Lays Off Workers, Revises Outlook
- EBay Earnings Slide 30% In Fourth Quarter
Blog List
More News
- Hirco Reports Strong Residential Sales at Its Chennai and Panvel Townships
- Redwood Trust Announces Pricing of Common Stock Offering
- Capital Crossing Preferred Corporation Receives Nasdaq Staff Deficiency Letter and is Actively Seeking to Fill Existing Vacancies on Its Audit Committee
- Lockerbie & Hole Announces Project Delay
- Ryland Announces Fourth Quarter Earnings Release and Conference Call
- HFF Closes $94.5 Million 'A' Note Sale for Bank of America
- ELS Announces Tax Treatment of 2008 Dividends
- Health Care REIT, Inc. Appoints John T. Thomas as Executive Vice President - Medical Facilities
- AGNC Will Report Q4 2008 Results on February 4
- Inland Real Estate Corporation Announces Resignation of Roland Burris from Its Board of Directors;Company congratulates Burris on his appointment to the U.S. Senate
FOX Translator
No data currently available.
No data currently available.
Close your eyes and imagine it's 1975. Inflation is high, jobs are scarce and the government decides the best way to stimulate the economy is to raise taxes. Nowadays, that approach doesn't seem to make much sense, but smart people once believed that the best way to help the common man was to tax him as much as possible, then turn around and dole out entitlements to keep folks afloat.
What changed this thinking was a little curved line on a piece of graph paper. During the Ford administration, a young economist named Arthur Laffer decided to prove graphically that higher taxes were bad and lower taxes were so good, they could actually boost government revenue, not shrink it. (There's an apocryphal story about him excitedly drawing a picture on the back of a cocktail napkin.)
How? Think of a pure curve, starting at zero and going to 100, with the peak of the hump somewhere in between (more on that later). At zero, if the government assessed no taxes, the government would have no revenue. But, at 100, if the government taxed all the income at a dollar-for-dollar rate, the government would have nothing either, since folks would have no incentive to work if they were handing over all their paycheck to the Feds.
Somewhere in between was the ideal rate between taxing so the government can stay in business, but not crippling regular folks. Ideally, low taxes are better, according to Laffer, since it gives more money to consumers to spend and thus stimulate the economy. In fact, the Laffer curve was the foundation of what became Supply-Side Economics.
And, for the record, Laffer never took credit for the idea, saying economists had been promoting the idea for centuries. Of course, none of them had a napkin.