The exception to the Laffer Curve

Monday, 03 November 2008 10:57

The Laffer Curve is derived from the observation that the higher the tax rate goes about above 30% or so, the less revenue is raised. But it only applies to present taxes which are levied on transactions, work, goods, and services. The tax reform proposed by the Campaign is an exception to Laffer's rule.

Taxes on transactions, wages, goods and services depress the economy - about 15% of the British GNP is lost because of the inhibiting effect of the tax system. And the tax system itself is a major reason why so many people are poor and needy, and a principal cause of benefit dependency.

On the other hand, the whole of the rental value of land could be collected and used as public revenue. This is the excepton to the Laffer Curve. When the revenue raised in this way is used to get rid of the existing bureaucratic and damaging taxes, the economy becomes stronger, the jobless have a good incentive to work, and there is enough left over pay out a sort of reverse poll tax. There is no need to fork out astronomical sums of taxpayers' money to keep people in involuntary idleness. Or even voluntary idleness, when the rewards for work are so much more than they are under the present crippling tax system.


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