| Kasz216 said: Actually, that's exactly what the Laffer Curve measures.... progressive taxation. Corporate taxation isn't really a good thing to measure vs countries because deductions vary a lot and don't really measure individual taxation. (IE more businesses there = more personal receipts.) Which is kind of the point. Like I said, look at the graph. The level of government spending doesn't really correlate with profits at all. Things like highways are the exceptions... and very rare ones at that when it comes to government spending... and ones that get diminishing returns. For example... look at Highways. They're already built. Most of the spending on new highways don't really bring any results at all, and aren't very useful. |
No, the Laffer Curve describes the correlation between a FLAT tax rate and the resulting tax revenue. As a progressive taxation system involves increasing tax rates as personal income increases, one cannot represent a progressive taxation system using a single tax rate number, as the Laffer Curve uses. And the point of the graph I showed was to demonstrate the problem with the Laffer Curve - that it's a very simplistic representation of a highly complex topic.
As for your graph, what I see is the total government spending as a reactionary thing. It doesn't correlate well because governments like the US government are very bad at targetted spending. Instead, they tend to be very politics-based - they pay for things because they look good politically, rather than because they actually do well. But many of the long-lasting spending sources are actually quite good for the economy - health, infrastructure, education, social security, and to a lesser degree military spending all have a strong positive impact on the economy. Research and Environment spending often has a strong impact on future economic situations, but not on current ones, because their effects take longer to be realised.
Regarding highways, you're mistaken. Not only is there highway maintenance (which is an ongoing stimulus process), but a growing population needs more highways to handle the higher traffic. And you should note that I'm using Highways because it's a federal-level responsibility - there's also lesser roads, handled at state or local levels. Of course, there's a limit to how much highway construction and maintenance should be done. Same with any field of expenditure. But the point is that properly-targetted spending is a great way to boost the economy, and this requires proper taxation. Tax cuts just restrict the government's ability to stimulate the economy, history has shown that they have never resulted in significant economic boosts.
