Economic adviser to late President Ronald Reagan Arthur Laffer joined Fox Business yesterday to dismantle the nutty economic thinking behind President Joe Biden’s leftist tax agenda.
Fox Business host Larry Kudlow asked Laffer if it was “true that rich people and corporations — and by the way, small business tax hikes are in this Democratic plan — is it true they don’t pay their fair share?” Biden has been reportedly eyeing the “first major” tax hike since 1993, which would include reversing some of former President Donald Trump’s tax cuts. Laffer didn’t hesitate in his answer: “No, it’s not true, Larry. I mean, when you raise taxes on the rich, what you do know is that the rich pay less in taxes.”
Laffer said the rich could typically resort to using “evasion, avoidance, underground economy, tax shelters — all sorts of things — legal and illegal to get around the taxes. And that’s been true from time and memorial.” In Laffer’s assessment, “All taxes are bad. But some are worse than others.” Laffer later summed up his frustration with the leftist tax agenda: “Have you ever heard of an economy being taxed into prosperity?”
Kudlow pointed out that “a large, large majority of Americans got tax cuts under Trump. Under [the Democratic] plan, they’re going to lose those tax cuts. And further, Art, which bugs me, middle-class folks and lower-middle-income folks who got the biggest benefits from the Trump tax cuts will lose those benefits.” Kudlow assessed that the “argument that [the tax hikes are] just for rich people is nonsense.”
Laffer listed a number of “indirect benefits” the Trump tax cuts provided for “all” Americans, such as “lower energy prices, better production, more efficiency.” Laffer said if the benefits were reversed, “the rich aren’t just going to sit there and take it. They never do. They have better accounts than the government stuff. And they’re going to put that through, so it’s going to come to the detriment of all of us.”
Laffer correctly noted earlier that the U.S. previously had the highest corporate income tax rate in the Organisation for Economic Co-operation and Development. Under Trump’s tax cuts, Laffer said, “job growth was amazing. The increase in incomes — especially for the poor, the minorities [and] the disenfranchised — were great. Now, if you reverse that process, it’s going to reverse the results as well.” Laffer also said he was glad the tax hikes were partisan, so that those who push them through will face political consequences in the future.
Later in the segment, Laffer said that what Democrats were planning in tax hikes “will lead to a slowing down of the economy and a lot more deprivation for those groups that desperately need the help.” He continued: “And, if I can just say, how do the poor ever become rich? They’ve got to do it by earning income. And if you make all these tax shelters and all these things, they’re voted right out of the range of ever building that wealth that they so desperately need.”
Kudlow honed in on Laffer’s point on “tax avoidance” as a major issue with tax hikes:
Not only are incentives being cut back, so there are barriers to work and investment on an after-tax reward basis, but people will avoid paying taxes. The revenue estimates will always be too high. The numbers coming in will be way, way lower. Why don’t — I mean tax avoidance — Democrats used to be concerned about tax avoidance. Now they’re concerned about people getting, you know, too rich or something. I don’t get this. I don’t get any of this.
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