Collapse forecasted by Arthur Laffer when Bush tax cuts expire in 2010

Arthur Laffer is predicting that the U.S. economy will collapse next year when George W. Bush tax cuts expire in 2010. His theory on the Obama tax plan is depending on how the super-rich can choose when and the way they collect their income to evade taxes. Laffer seems to think the economy is doing better this year than it should because these aristocrats are collecting more of their loot and spending more of their money before taxes rise. He also says that when taxes have to go up, Americans who can will choose to make less money, thus reducing the government’s tax revenue anyway.

Article Source: Arthur Laffer predicts collapse when Bush tax cuts expire in 2010

2010 Bush tax cuts expire

Arthur Laffer became famous when he helped to influence the Reagan administration to cut taxes. His Laffer Curve regarding taxes seems in some of the economic textbooks. Laffer said in his Wall Street Journal column that Reagan tax cuts brought the economy out of what was once the worst U.S. recession given that the Depression -- until the Mt. Everest recession we're still trying to get out of now made that one look like a speed bump. He said when all of these tax cuts went into effect on Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5 percent in 1983 and 5.5 percent in 1984. He doesn't seem to explain at all how Bush tax cuts in 2001 and 2003 within the face of two wars eventually ran the U.S. economy into the ground and destroyed a budget surplus he inherited from Bill Clinton.

Arthur Laffer’s curveball

The Laffer Curve tax cut argument misleads his readers, as reported by Asha Bangalore at Northern Trust. As one more recession set in after the huge Reaganonomic era, Bangalore wonders why the economy posted substantial growth after tax increases were implemented by Bill Clinton in 1993. A revival of bank lending after the Reagan hangover led to self-sustained growth despite all of the tax increases. Bangalore also points out that if the Laffer Curve theory about tax cuts is valid, the U.S. economy would have done better than record the weakest period of economic expansion in history following the Bush tax cuts of 2001 and 2003.

Lower than Reagan’s tax plan is Obama’s

Arther Laffer's predictions of economic collapse when tax cuts expire in 2010 is questioned by The Motely Fool also. In his column Laffer explains that we're all going to die when the highest federal personal income tax rate goes to 39.6 percent from 35 percent. According to The Fool, it is worth noting the 1983 cuts Laffer remembers so fondly lowered top rates from 69.13 percent to 50 percent. Top marginal tax rates that are under all but one year of Ronald Regan's presidency were a lot more than 50 percent. The Obama tax plan wants to revert the highest personal income tax rates to 39.6 percent, where they were within the '90s when the economy boomed and also the government collected much a lot more taxes than it had spent.

Arther Laffer feels your pain

Arther Laffer, the chairman of an investment consulting firm and obviously very wealthy, is making predictions of economic collapse from a very narrow point of view. Bangalore goes further to point out that the obstacles the economy will face in 2011 have nothing to do with tax increases. A severe credit crunch and housing market challenges are factors that may have far greater influence on the economy. Most people will keep their head up and try to survive. But when Arthur Laffer's personal income tax rate goes up 5 percent, the millions he won't pocket will seem like the end of the world indeed.

Additional information at these websites

Wall Street Journal online.wsj.com/article/SB10001424052748704113504575264513748386610.html?mod=WSJ_latestheadlines Northern Trust northerntrust.com/pws/jsp/display2.jsp?XML=pages/nt/0601/1138283678319_6.xml&TYPE=interior&er=dgcDetail&c=primary/resource/1006/1275944180574_442.xml Motley Fool caps.fool.com/Blogs/ViewPost.aspx?bpid=403124&t=01003534026331805883