Talk:Laffer curve

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What is a "stylized graph?" I have degrees in math and engineering, and have never heard of such a thing; neither does a Google search turn up any significant hits. Perhaps this should just read "graph?"


"There is serious doubt about the relevance considering a single marginal tax rate."

The relevance of what? Of considering a marginal tax rate? Of the curve? Vague. Surely the curve. But needs clarity.

Records and Analysis[edit]

Lawrence, there is a difference between simple records and analysis.

An academic study says, "things must be this way."

Simple record says, "this happened."

A record doesn't say, "what happened could not have been otherwise" but rather "this happened to occur." It's like saying "Babe Ruth happened to have a lot of strike outs during his period of home run hits." Almost anything can serve as a source for the latter, and since this is a simple matter of record, I really don't care WHAT source you want to use. It's just boring news about 2000s tax revenues that HAPPENED to agree with the theory predicted by Hsing in the 1990s. Let's not war about the news, but work together until you're okay with it.SkyWriter (Tim) (talk)

Just to be clear -- I'm not interested in an edit war, but rather looking for how to collaborate on something non-controversial. The controversy is in the theory of what must and should optimize tax revenue (which involves academic sources). The non-controversial material is the simple history of what levels have experienced maximum revenues so far. That's no more controversial than Babe Ruth's batting average. It says nothing about what must or should occur, but rather reports on what has so far. Since the record happens to fall within the range of one academic source already listed in the article, and the Romer paper I added, it is certainly of interest in the article. There's no reason not to list it, and if maximum revenues change to correspond to a different academic theory, then it's a simple matter of updating it.SkyWriter (Tim) (talk)

About the recent additions[edit]

Discussion from the user talk pages:

Dear SkyWriter, I truly believe that you are a reasonable person and that you are here to improve the Encyclopedia. However, your additions to the article Laffer curve show that you are not taking seriously enough, our policies No Original Research and especially Synthesis. I don't have much time to edit now, so I won't be getting involved in Laffer curve anytime soon. But please, please do read and take to heart those policies. Especially, I would like to highlight for you in WP:NOR, where it says, "you must be able to cite reliable, published sources that are directly related to the topic of the article, and directly support the material being presented.", and "Even with well-sourced material, if you use it out of context, or to advance a position not directly and explicitly supported by the source, you are engaging in original research" And in WP:SYN, "If a single source says "A" in one context, and "B" in another, without connecting them, and does not provide an argument of "therefore C", then "therefore C" cannot be used in any article." LK (talk) 04:41, 18 January 2013 (UTC)

Lawrence, I also believe you are a reasonable person -- but you've accidentally stumbled into an unreasonable position that's prevented you from addressing my point: not all source requirements are equal.

Do you need an academic peer reviewed scientific paper that needs a 32 dollar payment even to access in order to know that Babe Ruth had a lot of strike outs AND a lot of home runs at the same time? No.

Such a paper may be required to prove a causal relationship between the two, but NOT their corresponding occurrence.

In any case, the Laffer Curve article is in bad shape. Nothing is well defined, and it shows.

The Laffer curve is at 70%.

The Laffer curve is also at 35%.

The Laffer curve is also at 35%. (that's not a typo)

The Laffer curve is also at 20%.

The first is top marginal tax rates on a single tax system (such as France). The second is average tax rates on a single tax system (such as France). The third is top marginal tax rates on a hybrid tax system (such as the United States, where the State and Local taxes are about 20% of GDP and the Federal government is also about 20% of GDP). The third is the average tax rates on a hybrid tax system.

Now, most of the academic journals listed are speaking of the first option, while Hsing is talking about the second option. NONE of them are even calculating what is popularly applied in blogs and news articles as the Laffer curve, and I don't think Laffer does either. That's the problem with the curve -- it's not well defined. Liberal sources tend to look at the calculation that is most natural for top marginal rates on a single tax system, and laugh at Laffer curve valuations in the 20s and 30s as utterly ridiculous and beneath mention. Conservative sources tend to look at the calculation that would apply to a hybrid tax system (since the term is popularized in the United States) and think the Liberal calculations are equally absurd.

Neither is wrong -- they are talking about entirely different things. And the article doesn't even address that. Anyone reading the current article could be left with the impression that BOTH state and federal tax rates should EACH be at 70%!

In any case, the distinctions need to be added to the article. Neither of us have a lot of time. That means we do NOT have time for edit warring. I don't CARE what sources you prefer, but they need to be used in such a manner that has some meaning and context.

The sources I used were specific for the Federal government's share of the tax pie. The sources that are there are for top rates on a single tax system. At least allow that to be mentioned, or Laffer himself would not be able to recognize his own curve.SkyWriter (Tim) (talk) 11:03, 18 January 2013 (UTC)

You are still falling into the trap of OR. Per policy, a reliable source should exist for EVERY SINGLE POSITION OR ARGUMENT. Don't try to figure out the truth by integrating various sources and presenting that in the article. Only summarise the arguments and positions of what is in reliable sources. You additions to the article are a mishmash of OR and SYN. Please stop.
BTW, the Laffer argument is quite clear that it assumes a single tax rate. So, average tax = marginal tax. If a source doesn't mention average or marginal rates, don't attribute such a view to them. LK (talk) 11:18, 18 January 2013 (UTC)
That's not a trap of OR at all. The application of the Laffer curve was to FEDERAL tax rates. Can you even FIND a popular source that doesn't? The academic journals you listed gave two different rates: 35% and 70% as if they disagreed. I had to add the fact that they didn't disagree. That's not OR. It's just reading the material. Even worse, the Hsing article did NOT assume a single tax rate, since it presented itself as a study of FEDERAL tax rates (which by definition are in addition to State tax rates). Your article is nonsense unless it is defined. I invite you to do so, and am willing to help. But it does need to be defined.SkyWriter (Tim) (talk) 11:36, 18 January 2013 (UTC)
Take a look at the chart on page 48 here:
You can see that the writer is measuring Federal tax rates alone -- not combined state, federal, and local. And you can also see that he is comparing them to other single tax rate countries. So, he is mixing a hybrid rate into a single rate as if they are on the same scale. It's not just a problem with the article, but with most of the papers that address the subject (including Laffer himself). Surely not ALL of the papers make this mistake. But you as an economist can see that the paper does not use a pristine assumption as you assert.
I don't care which rate is "right" or "true." That's not our job as editors. Our job is to say what's out there. Well, the article needs a bit of detail or readers will be just as confused as the writer of that article.SkyWriter (Tim) (talk) 11:47, 18 January 2013 (UTC)
BTW, just for giggles -- calculate the top marginal tax rate if the AVERAGE rate is 70% and the bottom rate is 5%, on a straight logarithmic progressive tax.SkyWriter (Tim) (talk) 12:03, 18 January 2013 (UTC)
I'm done here, if you can't see, you won't. I'm sorry but the additions are uncited and original research, in that they are your conclusions which you draw from the sources, rather than what is stated in the sources themselves. The edits violate WP:V, WP:OR and WP:SYN. I have removed them, I realise that you will likely reinsert them, but I advise against it. LK (talk) 02:11, 19 January 2013 (UTC)

Lawrence -- there are three problems here:

First, as I said, the fact that more per capita revenues were raised at 35% rates is not a matter of interpretation, but history. It's a simple matter of record and does not require an academic source.

Second, academic sources must be put in the context THEY THEMSELVES set. The current state of the article is making those sources say something they do NOT say. The calculations for the Laffer curve are made in isolation -- that is, in the absence of ANY other taxes. As Hsing notes, the average tax burden peaks at 35%, and the maximum progressive tax peaks at 65% - 70%. The economic sources are all in agreement on this, as is the source I initially gave. But it needs to be STATED that these numbers are in the absence of any other tax, or people will think these academic journals are suggesting a 65% rate for the real Federal income tax, which they CANNOT. If the Laffer curve peaks at an average burden of 35% and a maximum progressive burden of 65%, that includes ALL taxes, not just one. Add a 5% SALES tax and the maximum potential for a progressive tax falls to 55%. Or if you have a 20% VAT tax instead the potential income tax rate peaks at 25%. If it's not stated in the article that the Laffer curve includes ALL taxes together, then the article says something the academic journals would never be irresponsible enough to say.

Third, collaboration is different from edit warring. If you don't like a source, improve it. It would have taken you ten minutes to find a source better to your liking, rather than the hour or two you've devoted to avoiding collaborative work. Wikipedia isn't king of the hill. It's a collaborative effort. And if you don't WANT to work with others, then for goodness sake don't get in their way. I've asked you several times what you want here, and I'll be glad to hunt for it WITH you. But edit warring is both counter-productive and a waste of time.

Worse -- it's left the article hanging with the impression that the Laffer curve can be applied to EACH TAX cumulatively. The journals do not say that, and so the article ITSELF is some bizarre OR you've created in the guise of avoiding it. Any competent economist would look at this article and laugh his head off.SkyWriter (Tim) (talk) 16:03, 20 January 2013 (UTC)

Graph removal[edit]

Guest2625, et al. File:US_high-income_effective_tax_rates.png is discussed here Talk:Taxation_in_the_United_States#Employment_Graphs. Such a highly criticized, redacted, non-peer reviewed and partisan graph (created by an Obama campaign donor in the hight of election) should be considered with weight and NPOV balance. I'm not sure how it directly relates to the Laffer curve and seemed more an injection of POV without proper balance. I don't see this as any reflection on Guest2625 when he edited the graph as I've seen him upload many great graphs, this one just happens to be an issue. It made sense to remove such a graph until consensus is achieved for actually adding it or a new graph found. Sorry if my edit caused disruption - I was just trying to work through the listed articles. Feel free to discuss here or at the Taxation in the United States article as appropriate for the scope of this article. Morphh (talk) 14:24, 6 January 2014 (UTC)

A tad Americocentric?[edit]

Obviously, the term originated in the USA, but do you not feel that the article gets just a little bogged down in US domestic policy,with insufficient explanation of its universal implications and impact around the globe? Jatrius (talk) 10:31, 29 April 2014 (UTC)