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Lower Taxes, Higher Revenue

Lower Taxes, Higher Revenue

Should tax obligation prices be greater? It’s the million buck concern! Up? Down? No adjustment? Where on the planet should tax obligations go? In political election years, the concern of tax obligation prices fills up the airwaves. In non-election years, the concern of tax obligation prices, once more, fills up the airwaves. So what’s the solution? UCLA Professor of Economics Tim Groseclose clarifies his research study on the subject. Basically, there’s a specific factor at which greater tax obligation prices really minimize the quantity of earnings the federal government accumulates. What’s that factor? When are tax obligation prices too expensive? Learn an important lesson in business economics, as well as public law. Donate today to Prager U! JoiningPrager U is cost-free! Sign up currently to obtain all our video clips as quickly as they’re launched. DownloadPragerpedia on your apple iphone or Android! Thousands of resources as well as truths within your reaches. apple iphone: Android: JoinPrager United to obtain brand-new boodle every quarter, unique very early accessibility to our video clips, as well as a yearly TownHall telephone call with Dennis Prager! JoinPrager U’s message listing to have these video clips, cost-free product free gifts as well as damaging statements sent out straight to your phone! Do you go shopping on Amazon? Click as well as a percent of every Amazon acquisition will certainly be given away to Prager U. Same excellent items. Same affordable price. Shopping made purposeful. BROWSE THROUGH Prager U! FOLLOW us! Facebook: Twitter: Instagram: Prager U gets on Snapchat! SIGN UP WITH Prager COMPEL! ForStudents: SgPaX. JOIN our Educators Network! Script:. Let’s go over an essential principle from business economics, the LafferCurve This principle is called after the male that created it, Arthur Laffer, a significant American financial expert that has actually shown at the University of Chicago, University of Southern California, as well as in other places. TheLaffer Curve highlights both crucial points we require to understand about tax obligations: just how much cash the federal government can elevate from tax obligations as well as at what degree of tax the federal government could begin obtaining much less, not a lot more, earnings. TheLaffer Curve is highlighted right here by a two-dimensional chart. The straight line is the tax obligation price that the federal government picks, as well as the upright line is the earnings that the federal government gets from that tax obligation price. First, due to the fact that no times any type of number is no, if the tax obligation price is no, after that the federal government gets no earnings. Accordingly, zero-zero is our very first factor on the contour. Now mean the federal government picks an extremely little tax obligation price, claim 1 percent. The federal government will certainly after that start to get some earnings from residents. This suggests that an additional factor on the contour have to be something similar to this. Now mean the federal government bills a 2 percent tax obligation price, after that everybody would certainly concur that it will certainly get a lot more earnings– which suggests that an additional factor on the chart have to be something similar to this. And if the federal government maintains increasing the price, after that earnings will certainly remain to rise. a minimum of when we remain in the low-tax-rate component of the chart. This suggests that if we fill out the contour, it has a higher incline– a minimum of when we remain in the low-tax-rate-part of the chart. Now mean the federal government bills a 100% tax obligation price. If this takes place, after that nobody would certainly function. That is, why would certainly anybody job when the federal government is mosting likely to take all the cash that they make? And if nobody functions, the nationwide earnings would certainly be no. This suggests that federal government earnings would certainly be 100% of no, or no. This suggests that an additional factor on the contour have to be right here. Now allow’s total the contour. When we do, we see that the contour has to have a bulge. That is, it can resemble this, or this, or this, yet it needs to have a bulge. This is merely due to the fact that the earnings line needs to go up in the reduced tax-rate component of the chart as well as needs to begin dropping to get to the factor we attracted at the 100% tax obligation price. But if the contour inclines downward it suggests something exceptional– something that few of those that promote greater as well as greater tax obligations intend to confess. It suggests that when tax obligation prices are high, if you make them greater, you’ll really generate much less earnings to the federal government. This has in truth took place in technique. For circumstances, throughout the Great Depression, when Congress passed the Hawley-Smoot toll expense, although the expense elevated tax obligations on imported products, the earnings that originated from those tax obligations really lowered. A a lot more current instance took place in the very early 1980 s. After President Reagan as well as Congress substantially decreased the tax obligation prices on the abundant, the tax obligation earnings that originated from the abundant really boosted. For the total manuscript, check out
sourcePosted in EconomyTagged , , , , , , , , , , , , , , , , , , , , , ,


Sonny Redlinger - posted on July 14, 2019 4:00 pm

The problem is, when Republicans become big spenders instead of big cutters, tax cuts breaks pile up the debt.

Rafael Wilks - posted on July 18, 2019 8:14 am

Ignore PragerU. Learn what the One, Holy, Catholic, and Apostolic Church infallibly teaches on this subject.

Lord Colin - posted on July 20, 2019 4:23 pm

So I should vote against my self interest so wealthy people can be a tiny bit wealthier, while making it so I have to work several jobs to live, and still can’t go to the doctor? Sounds like a good deal.

ElAsombrosoPachus - posted on July 22, 2019 6:10 am

I come from the future. President Trump just did that in 2019 and that raised the government´s revenue, much to the displease of the leftists. It was awesome.

Sky0001000 - posted on July 26, 2019 2:26 am

If the curve goes down as a result of willingness to work, then it is reasonable to suggest that when a country reaches the hump of their laffer curve, the downward slope would not only complete, the hump and tax rate would also reduce.

If we apply this to current global economics and politics, you can easily suggest that a state of national unrest that resulted from a country reaching their hump, would exponentially reduce the tax rate at which people were willing to contribute.

Jake - posted on July 27, 2019 2:12 am

logic is a bit flawed when saying nobody will work if they tax 100% of income. people will always work despite high taxes. how else would they survive?

Fhf Fvgju - posted on August 1, 2019 5:07 am

Then comes the examples from history where high taxes don't stop the economy

guloguloguy - posted on August 5, 2019 1:24 am


Shannon Denham - posted on August 13, 2019 8:23 am

If 10% if good enough for the Lord, the govt deserves waaaaaaaaay less

Steve Peterson - posted on August 14, 2019 2:36 am

This video doesn’t mention marginal tax rates

James Francis - posted on August 22, 2019 7:31 pm

In Canada we work until the 3rd week of June for taxes. In Canada we have a government that intentionally acts to increase the cost of living of its citizens with shell games like the carbon tax and other redistribution schemes.

CRS - posted on August 23, 2019 10:16 am

Yh but how

Jordan Breon - posted on August 23, 2019 3:13 pm

The same happens with wages. I’m an electrician. Should I work more than 52 hours in a week, I actually average out to less my time and half rate after that. In other words, I almost go back to normal rate from about 53 to 59 hours, and over 60 I make less an hour than I did 1-40. There is never a reason to go over 59 hours, and rarely a reason to go over 52.

At that point, the opportunity cost of being at work is too high. I’d rather be home, sleeping, playing with my kids, or rolling around in bed with wife. But as much fun as I have doing those things, it undeniably more productive for me to be at work.

ronki23 - posted on August 24, 2019 12:41 am

People say trickle down economics doesn't work because the money saved by not being taxed will either be kept in the bank or put into off shore investments. While it may not 'work' in that the rich get richer, the poor also get richer. Tax is a necessity but increasing taxes on the rich is not fair as they'd be paying for the welfare and social security of others (trickle up reduces taxes for the poor and increases it for the rich). I'd prefer a flat tax rate or simply cut taxes for EVERYONE

abdulsalam king - posted on September 1, 2019 1:50 am

I didn't really understand WHY would government's revenue get decreased by higher tax rates?? Is it because people would not want to work if taxes are high??

Obnyr - posted on September 7, 2019 8:15 pm

That curve combines all income levels together. To fully understand the situation, I will also need to see the graph of optimum tax rate against income level. It definitely should differ because the minimal cost of living (in reasonably safe and healthy conditions) is not as mutable as income or tax rate and therefore would be a higher percent of lower income levels.

kcirred nosrednad - posted on September 8, 2019 9:47 pm

Well, I say we practice having a lower tax rate to see if a higher revenue does happen. I'm willing to bet that it will.

Travis Stockwell - posted on September 9, 2019 9:54 pm

Great video, but does the 33% refer to income tax only, or to the entire spectrum of taxation, including the Hidden Tax?

G K - posted on September 12, 2019 1:03 am

Leftists love when everyone else is paying a high percentage of income tax.

Edward Walker - posted on September 13, 2019 9:07 am

I do agree with the laffer curve but it does not take away from the fact that taxation is theft.

MyTruckinLife ACE - posted on September 13, 2019 11:41 am

Yet the left will have you believe that people aren’t paying their fair share because of a lower percentage.

TheRealJasonC - posted on September 13, 2019 9:29 pm


Francis Staines - posted on September 15, 2019 5:40 pm

Hmmm imagine that… being an economic vampire hurts the government.. who'd have thought

Hamish Mctavish - posted on September 19, 2019 10:10 am

Follow our future leader in Canada, he’ll grow the economy by lowing our taxes and shrinking the government vote Andrew Scheer

Ramiro M - posted on September 20, 2019 2:57 am

And yet another PragerU vid states the more money you give government , the more corruption, fraud, waste and abuse occurs with those funds.

Tai Lu - posted on September 24, 2019 1:26 am

i am a left wing socialist borderline communist. i disapprove this message

Reed Richards - posted on September 27, 2019 3:18 pm

put the tax rate at 30% for conservitives and 70% for liberals then we can all be happy

Swisha Blues - posted on September 27, 2019 3:19 pm

What about 0 tax rate

John Doe - posted on September 29, 2019 1:33 am

I would argue that you may not have been taught something wrong. the hump of the laffer curve would theoretically have to change with the attitude of the people and the plan of the economy. I am not endorsing this, because its infeasible in the real world, but true genuine communism, as defined by Marx, would have a 100% tax rate, and everyone would work out of the drive to move the collective forward, and as the commune provides all, you would not need income to sustain yourself. Now, in the real world, this system wouldn't work, but It illustrates my point that in that hypothetical system, with those hypothetical perfect altruistic people, there would be no need for a hump at all. the same is true of any laffer curve in a realistic system. the level of altruism of the populace, and the percent of the income that people would need to survive are important variables that can change where the hump of the curve occurs. the change in this social dynamic my have facilitated the change in what you were taught and what we know to be the case currently.

Дмитрий Гришков - posted on October 6, 2019 11:37 am

That make sence, because government doesn't produce any goods or revenue it just take wealth from everyone and redistribute it fo it's needs.
So, the less taxes you take, the faster an economic will grow (if it's free market) and the more money you can collect from everyone with the same tax rate percentage

Diablo 666 - posted on October 7, 2019 7:59 pm

Come to Canada if you want to talk about taxes. They say they take 33 percent which is already B.S but that's just federal, then there's provincial, Canada pension plan (which no one my age will see any of, and if u do it's a joke) the employment insurance ( which yet again they usually deny you for unless your a useless junkie it sponge that never worked in the first place) it looks closer to 40 percent… Retarded. Then u can watch the government completely waste it in stupid shit that we have no say in.

JustHappy - posted on October 8, 2019 12:54 am

33% is the max rate in Australia but more people pay it than pay the max rate almost anywhere else in the world. See it this way-one out of every three dollars we make, goes straight to the tax man. It's enough to turn anyone libertarian.

Ethan Chaney - posted on October 8, 2019 7:41 pm

Trying to do a research paper in school, would be very nice to have some cited pages in the description.

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