Wednesday, May 30, 2012

Krugman: Laffer curve is 'junk economics'

From Paul Krugman on the Laffer Curve:
it’s junk economics (pdf). See the data in the linked piece.
His link connects to a study, which we've blogged before, called “High Rate” Income Tax States Are Outperforming No-Tax States: Don’t Be Fooled by Junk Economics, by the Institute on Taxation and Economic Policy (ITEP,) a sister organisation to our friends at Citizens for Tax Justice. Krugman is full of praise for ITEP:
if you want to discount ITEP as a liberal source — which you shouldn’t, because they do very good, careful work
and he refers to a comprehensive study by Jim Alim which says, in the abstract:
"there is moderately strong evidence that a states political orientation has consistent and measurable effects on economic growth; perhaps surprisingly, a more “conservative” political orientation is associated with lower rates of economic growth."
Cue, of course, hysterical comments beneath his article.

We get tired of banging on about old Arthur Laffer, to be honest, but it's a zombie that won't die, so we keep having to come out every now and then, to bash it on the head. Krugman has saved us a bit of time here.

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