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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Author: albaby1 ✶❂🐝 GOLD
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Number: of 86268 
Subject: Re: JediPunishment France
Date: 09/29/26 4:33 PM
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Except they're not, as evidenced by the FRED data upthread.

Real revenues relative to the size of the economy can't be increased by lowering tax rates. Nominal revenues always go up, because of inflation. And because there's baseline economic growth regardless of what you do with tax rates, real revenues will always rise independent of the specific tax policy you're looking at.

The Laffer curve only says anything meaningful if you happen to be at a point where the marginal rate is already so high that people are exiting the economy or reducing economic activity due to those high marginal rates by a large enough amount that you can get that counterintuitive result (lower tax rates = more revenue). IOW, not just that tax revenues are rising - which they do even when rates are held constant. Rather, that the delta in growth caused by the reduction in rates is large enough to result in an increase in tax revenues over what would have resulted absent the reduction.

The U.S. is not, and has not been in several generations, anywhere near that high a marginal rate. The Laffer curve is purely a theoretical idea - again, like the Giffen good.

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This community has written 86,214 posts about US Policy. The article-length ones it recommended most:
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