“It’s not left wing, it’s not right wing, it’s economics,” Laffer is fond of saying in interviews. It’s an argument for moderation and caution in tax policy. One extreme is asking too little, but the other is asking too much. This bell curve shows that tax revenues reach zero when rates are set at either 0% or 100%. We can thank US economist Arthur Laffer for making this assumption popular with the so-called 'Laffer' curve. These demands to either keep taxes low or cut rates further are all based on the assumption that lower taxes will generate greater economic growth and increase revenue as a result. However, the government shows no sign of backing down. Former Prime Ministers Boris Johnson and Liz Truss have reiterated their calls on the government to cancel its plan to raise corporate tax from 19% to 25%. If these plans are confirmed, Biden will likely face criticism from Republicans that tax hikes will hurt the US economy and not raise tax revenue.Īt the same time, the UK government is due to make its spring budget statement next Wednesday, March 15. US President Joe Biden is set to make his budget proposal on Thursday, March 9, and he's already hinted at higher taxes.
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