No. of Recommendations: 9
So you agree with Laffer that’s there’s a liv equilibrium somewhere in the middle, then?
Nope. First, as a quibble, what Laffer was talking about was a maximum in the middle, not an equilibrium. But even then, his approach was far too simplistic - and not at all useful for government tax-setting policy for the U.S. economy at any relevant point where we might be.
The basic problem with his approach is that while it might be theoretically possible for there to be a point where cutting taxes actually raise revenue, that point is most likely at around the 80-90% range that you alluded to upthread. It's not at any point that does or will exist in the U.S. economy in the real world. At any relevant level of tax rates in the U.S., you get the rather intuitive result that raising tax rates increases revenue and lowering them lowers revenue. It's like Giffen goods - they might theoretically exist, but they're not going to exist in any real-world economic situations.
So while one can certain imagine a theoretical U.S. economy in which Laffer's approach would be relevant, in any real-world U.S. economy it's just not going to be applicable.