Is There a Correlation Between Tax Cuts and Tax Revenues? | Data Driven Investor

What will happen to our economy if Joe Biden wins and raises taxes?

The other day on a Facebook thread, I was trying in vain to make the point with a group of recently retired pilots that we must raise taxes soon. I wrote that it has become necessary due to our national debt level, which is now nearly $27 trillion, and will be even higher by the end of 2020. By the laws of economics, that could quite possibly and most probably drive us into a hyperinflationary period. I also explained to them that as retirees, they should care more about inflation than tax rates. Presumably, they won’t be making over $400,000 a year in retirement.

One guy chimed in that my position, a necessary tax increase, was ridiculous and everyone knew that decreasing taxes would increase tax revenue. “Hadn’t I ever heard about the Laffer Curve?”

I didn’t want to bother with my bonafides, so I ignored him. They were frantically trying to convince me that taxes should not be raised. I could almost feel their desperation coming through the key strokes on their {smart}phones.

Of course, the Laffer Curve was always just a theory, one I studied while doing my graduate degree in economics at Georgetown University many moons…