President Trump has pointed to the growth linked to tax cuts passed by
previous presidents when promoting his plan. (photo: Doug Mills/The New York
Times)
Trump Stumped: Tax Cut Based on His D-Student Misunderstanding of Economics
By Greg Palast, Greg Palast's Website
27 April 17
Trump claims his big tax cut will pay for itself based on his D-student
misunderstanding of the "Laffer Curve." Economist Art Laffer, my mentor at U
Chicago, showed how cutting taxes could produce more tax revenue, a theorem
he famously drew on a napkin.
(photo: Greg Palast)
Laffer drew the Curve for me-also on a napkin. (I can't make this up: Art
was addicted to cheeseburgers and always scribbled diagrams as he talked and
chowed down. This is a replica of what he showed me-he used the original to
wipe up.)
One napkin was shown to Ronald Reagan who, foreshadowing Trump, was too
thick to understand it. Like Trump, the Gipper thought that it proved that,
'the lower the tax, the more tax revenue collected.' George Bush Sr. called
that "voodoo economics."
Not voodoo, no; but here's the key-pay attention, A students!- it's a CURVE.
When "marginal" tax rates are ABOVE 90%, cutting to, say, 85%, will actually
produce more tax revenue from increased business activity. But at the lower
end of the curve, with taxes below 40% as they are now, there's no tax
gain-just the opposite, the Laffer Curve shows tax collections will
collapse.
Cutting the corporate rate to 15% from 40% will cause a $4 trillion-dollar
tax loss - which non-corporations, that is, working class schmucks who voted
for Trump, will have to make up.
Take a look.then wipe that cheese off your chin.
And that ain't the bottom of the stupid and venal oozing from the Oval
Office. The Donald's tax plan includes opening new loophole called,
"territoriality." To translate from the pigs'-Latin, this means that the US
can no longer collect taxes on profits of US corporations on their foreign
operations.
In other words, THIS IS A MASSIVE TAX BREAK FOR MOVING A FACTORY OVERSEAS.
Shifting your plastics factory from Midland, Michigan to Monterey, Mexico
means you no longer pay taxes on it. Hey, wasn't this the guy who said he'd
TAX companies that leave the USA?
Well, it looks like he'll make Mexico great again.
But maybe Trump is no tax dunce-but one very brilliant business man who
knows how to dupe his troops. After all, he's a casino magnate who makes his
money by fleecing those suckers in the red trucker hats. Trump knows: the
house always wins.
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