We’ve previously blogged on Donald Trump’s plans for cutting corporate income tax, and now they’ve come to fruition we can see the results as far as the USA is concerned. Tax receipts are plummeting, despite the economic boom stimulated by his predecessor’s QE programme. Commentators have widely predicted that this will inevitably lead to a widening deficit, greater inequality, and harmful impacts on other countries as tax competition pushes the race-to-the-bottom, but these are just details!
Trump is not the first politician to be seduced by the alchemy of Arthur Laffer’s phoney curve, and he won’t be the last, but it’s not encouraging that they just keep on doing this despite the mountains of evidence refuting the idea that tax cuts yield higher long-term revenues.
Meanwhile, and notwithstanding the calamitous harm inflicted on the state of Kansas, which took the tax cutting route to its logical conclusion, some politicians just keep lapping up Laffer’s snake oil.