Alex Massie Alex Massie

Laffering all the way to the Revenue

Lots of talk about the Laffer Curve these days as folk argue over whether it a) exists at all and b) under what circumstances it might be applicable if a) is true. But it seems odd to me that fiscal conservatives in either the US or the UK would seek to make the argument that tax cuts are good things because they increase government revenue. As Milton Friedman, I think, once said, if you’re increasing government revenue by cutting taxes you’re not cutting taxes by enough.

Broadly speaking,the case for – or for that matter against – tax cuts in developed economies such as the US and UK that don’t have what one might term punitively confiscatory levels of taxation rests on moral and philosophical grounds concerned with one’s overall view of the role and proper reach of government, not on whether or not tax cuts increase revenues. In a political sense, of course, that may not be comfortably tenable these days (especially in the UK) but that’s a different matter altogether.

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